III (B) Fair Dealing

CFA Level III Ethics
#1

Can a firm provide two different services, for example:

  1. Investment advice related to secondary equity market.

  2. Investment advice related to new IPOs and secondary offerings.

and not be in violation of the Fair Dealing standard when it gives recommendations and allocations on IPOs and secondary offerings only to clients who pay for service 2?

#2

OP, i hope you don’t mind i add my questions to this because it’s relating to the same standard.

when a manager wants to give out extra IPO shares.

  1. allocate equally

  2. only allocate equally to accounts who it deems fit

  3. allocate it to accounts equally to whom pay a higher fee (getting extra level of service)

or am I mixing up difference standards or situations?

#3

Hi AlmostDoneIII

Choice 3 is closer to the CFAI guidelines. A PM should allocate IPO shares only to suitable accounts; however, not equally. IPO shares should be allocated according to account size, risk/return objectives and so on.