Participation in Equity IPOs

CFA Level I Ethics
#1

I refer to Reading 2, Pg 130 of the Ethics section. In the interests of not violating the standard “Conflicts of Interest - Priority of Transactions”, it is understandable that one of the recommended procedures for compliance is “Limited Participation in Equity IPOs”, as it could be perceived that investment managers could be taking away a valuable investment opportunity for clients.

Is participation by investment managers in IPOs forbidden under all circumstances, or is it allowed provided that the client’s orders are executed before the investment manager’s order?

#2

As long as your clients’ orders are executed first, there’s no prohibition against management participating in IPOs.

#3

Thank you very much.

#4

You’re welcome.