I guess the 5 days just seems too arbitrary to me. If you know a client is going to make a trade 6 days in advance, it’s OK to front-run? But within 5, you’re out of luck? Also, only for discretionary accounts? Here’s a completely non-rhetorical question: Is it a requirement to have personal trades pre-approved? I know you need to disclose your holdings and transactions etc., but actually getting trades approved before the fact? I just don’t recall seeing this in ethics. Therefore, even though the $5000 was arbitrary and seemed quite high, I was thinking that, since you don’t actually need to get trades pre-cleared anyway, maybe this isn’t really a violation. I fully admit I could be wrong, because none of them looked right to me. This one just seemed like it was the only one that wasn’t actually a violation.
the 5k barrier doesnt do anything. you could just split your large trade ($1,000,000) into a bunch of smaller trades, say 250 trades of $4,000 and you get the same result… so the limit is a) arbitrary and b) useless. I am 99.5% confident on the 5 days here…
Jed Wrote: ------------------------------------------------------- > I guess the 5 days just seems too arbitrary to me. > If you know a client is going to make a trade 6 > days in advance, it’s OK to front-run? But within > 5, you’re out of luck? Also, only for > discretionary accounts? > > Here’s a completely non-rhetorical question: Is it > a requirement to have personal trades > pre-approved? I know you need to disclose your > holdings and transactions etc., but actually > getting trades approved before the fact? I just > don’t recall seeing this in ethics. > > Therefore, even though the $5000 was arbitrary and > seemed quite high, I was thinking that, since you > don’t actually need to get trades pre-cleared > anyway, maybe this isn’t really a violation. > > I fully admit I could be wrong, because none of > them looked right to me. This one just seemed like > it was the only one that wasn’t actually a > violation. there is no requirement for preclearance but they do suggest reviewing trade confirms.
Where does every see that it says you need duplicate trade confirms from everyone? I swear I read somewhere that random was fine. I thought the 5 days was arbitrary, where the heck does it say 5 days in the standards, if that is the case I will just do all my front running 6 days prior. In any case I have -1 on this one for myself.
s23dino Wrote: ------------------------------------------------------- > Where does every see that it says you need > duplicate trade confirms from everyone? I swear I > read somewhere that random was fine. I thought the > 5 days was arbitrary, where the heck does it say 5 > days in the standards, if that is the case I will > just do all my front running 6 days prior. In any > case I have -1 on this one for myself. i seem to remember that the random was a very small % of trades in that example (which is why i didnt’ pick that answer).
redsoxrule Wrote: ------------------------------------------------------- > the 5k barrier doesnt do anything. > > you could just split your large trade ($1,000,000) > into a bunch of smaller trades, say 250 trades of > $4,000 and you get the same result… > > so the limit is a) arbitrary and b) useless. > > I am 99.5% confident on the 5 days here… I agree that it doesn’t do anything. I also think it’s not necessary & therefore, the fact that it does nothing & is arbitrary does not violate the standards. The only reference to prior approval that I can find is this (from Schweser - Asset Manager Code): "TRADING…Appropriate procedures include: (…) *Requiring employees to seek prior approval for investing in initial public offerings or private placements. *Create restricted watch lists of securities that are owned or that will be traded by clients. *Requiring employees to provide quarterly information regarding their own personal trades. " The fact that they specify prior approval for IPOs tells me that prior approval is not required for non-IPOs (again, as long as you’re not violating ethics in some other way, such as front-running).
oskigo Wrote: ------------------------------------------------------- > s23dino Wrote: > -------------------------------------------------- > ----- > > Where does every see that it says you need > > duplicate trade confirms from everyone? I swear > I > > read somewhere that random was fine. I thought > the > > 5 days was arbitrary, where the heck does it say > 5 > > days in the standards, if that is the case I > will > > just do all my front running 6 days prior. In > any > > case I have -1 on this one for myself. > > i seem to remember that the random was a very > small % of trades in that example (which is why i > didnt’ pick that answer). I dont remember seeing that, I don’t think it specified, but then again I could have missed it.
Jed Wrote: ------------------------------------------------------- > I agree that it doesn’t do anything. I also think > it’s not necessary & therefore, the fact that it > does nothing & is arbitrary does not violate the > standards. > > The only reference to prior approval that I can > find is this (from Schweser - Asset Manager Code): > > "TRADING…Appropriate procedures include: > (…) > *Requiring employees to seek prior approval for > investing in initial public offerings or private > placements. > *Create restricted watch lists of securities that > are owned or that will be traded by clients. > *Requiring employees to provide quarterly > information regarding their own personal trades. > " > > The fact that they specify prior approval for IPOs > tells me that prior approval is not required for > non-IPOs (again, as long as you’re not violating > ethics in some other way, such as front-running). they didn’t asked what was required they asked what was most consistant right? many companies have a pretrade rule. none that i know of have a trade size rule. my .02
s23dino Wrote: ------------------------------------------------------- > I dont remember seeing that, I don’t think it > specified, but then again I could have missed it. i swear it said something like they would randomly review 5% of their employees accounts. i could be wrong too.
Jed Wrote: ------------------------------------------------------- > I agree that it doesn’t do anything. I also think > it’s not necessary & therefore, the fact that it > does nothing & is arbitrary does not violate the > standards. > > The only reference to prior approval that I can > find is this (from Schweser - Asset Manager Code): > > "TRADING…Appropriate procedures include: > (…) > *Requiring employees to seek prior approval for > investing in initial public offerings or private > placements. > *Create restricted watch lists of securities that > are owned or that will be traded by clients. > *Requiring employees to provide quarterly > information regarding their own personal trades. > " > > The fact that they specify prior approval for IPOs > tells me that prior approval is not required for > non-IPOs (again, as long as you’re not violating > ethics in some other way, such as front-running). Right, the limit itself is not a violation of course. but they wanted to know which one was “_closest_” to the CFAI Code of Ethics.
I went with 5 days. I remember seeing in CFAI or Schweser that you must give your clients 5 days to act on your recs before you can trade in the stock. I can’t remember the other choices, but this seemed the best answer.
^^ I can’t believe it specifically says 5 days anywhere especially when the sec has 7 days recommendation.
Anyway, I admit that I don’t know which one is the right answer, -1 for me s23dino Wrote: ------------------------------------------------------- > ^^ I can’t believe it specifically says 5 days > anywhere especially when the sec has 7 days > recommendation.