Folks, this is the problem on Pg.165 CFAI EOC question # 81.
If a firm receives IPO allocations and you are a portfolio mgr… If you allocate the IPOs to those discretionary accounts that normally participate in IPOs. if oversubscribed, should i exclude wife’s discretionary non-fee-paying account so that I would not be accused of bias when allocating these over subsribed IPOs.
My question is this: I should not allocate to my wife’s account because:
- She is a non-fee-paying discretionary account ?
- I have a benefical ownership ?
The CFAI answers states that - “I cannot make allcoations to accounts where members and candidates have beneficial interest; client orders must be filled first”
In this case, my wife’s account is also a “client to the firm”. Should I not treat her a/c as same as other client accounts for which this IPO is suitable ? Then My thought process was this: why I should not allocate to her a/c is it that since her a/c is a non-fee-paying discretionary a/c, I could skip her.( Different level of Services for different fee paying clients ).
General question:
Can I skip a client a/c because its a non fee paying discretionary a/c ?