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Must determine the applicable fiduciary duty and comply with such a
duty to the person to whom it is owned.Watch for PENSION PLANS! Trustees
are NOT OWNERS.
What is the intent of the parties involved?
Be careful, that if it affects the objectivity of the portfolio
manager (such as earning a bonus if portfolio increases by 20%) MUST BE
DISCLOSED TO THE CLIENTS
1. Care is higher2. Skill is higher. Delegation of duties is okay.
Whereas Old rule said NO3. Caution = total return not standalone basis.
Whereas Old Rule said NO growth, preservation only4. Loyalty is
consistent5. Impartiality is consistent
Really depends on intent. If you issue a buy rating, and then sell
stocks, this is a potential problem. Here it is conflicting so it is
obvious you are trying to manipulate the market.
Must include written disclosures as to the source and nature of the
performance. Particularly important when included performance of prior
employment, etc.
1. Total return is emphasized rather than preservation of PP2. Risk
consistent with expected return. Old Rule = NO RISK3. Portfolio
perspective, not individual securities4. Delegation of Duties in
encouraged. Old Rule = NO delegation5. No security is off limits because
they are risky standalone6. Delegation of Duties is okay
No violation when analyst combines public information with items of
NONMATERIAL information (such as seeing two CEOs have lunch).
This infers that IF client was not notified of a suitable investment.
You must extend the participation to all portfolios meeting the
criteria.
Cannot use CFA as a noun. "I am a CFA" is BAD written or oral.
However, you can write "as a CFA Charter holder." Here CFA is an
adj.Claiming superiority ability is not permitted. You can also not say
"anticipated charter holder in..."
Owner is defined as applicable fiduciary duty. The duty to a pension fund, the trustees are NOT the actual client.
Here, if the client mis-ordered the trade they must incur the cost. It
should NEVER be passed to their clients. They can pay the broker to
incur the cost, but it must come from their own pocket.
Obtaining information about suppliers (increased efficiency) is just
like observing CEOs have lunch. They are NONMATERIAL information. If you
are able to draw other inferences to create MATERIAL information, this
is OKAY!
Arrangement under which client tells the manger to execute trades under its account with a specific broker.
Creating liquidity is OKAY as long as there is no permanent
expectation. You must think: Is this intentionally meant to MISLEAD
market participants.
From Clients- are OKAY as long as they do not impeded on future
judgement. Must disclose this information.From Brokers- are NOT OKAY.
NEVER accept even if you have permission.
Theses costs are paid by the clients. Any referral fees CAN NOT BE
PAID BY RAISING COMMISSION. This means you are violating finding the
best trade execution. Brokerage's are client money.
Impartiality requires that the trustee act in a reasonable manner when
there are conflicting interest (remainder man vs current income
beneficiaries)
Care, Skill, Caution, Loyalty and Impartiality. Differs from Old Prudent Man Rule.
Additional compensation must have WRITTEN CONSENT from all parties
involved. Only necessary if the position is in direct competition of
your employer. Working at the bar (limited hours so that you do not
deprive your time) is OKAY.
You do NOT need permission. Rather you must disclose clients AND prospective clients.
1. "Among the elite"2. "As a CFA Charterholder" - cannot use as a
noun. Instead, "the CFA designation..."3. "Ensures better valuation.."3.
"CFA, expected..."4. "One of two CFA's" "Is a CFA" -again, used as a
noun.5. No C.F.A or cfa6. Cannot Bold, or spell out the name.7. Cannot
state CFA, 2009, CFA Society of UK. Need to site "CFA Institute"
Ratings that have been release means it is NO LONGER PRIVATE information.
Refers to research and other benefits provided to the client or
investment manager by the broker for directing trades to the broker.
Internal and external trades are considered "soft dollar".
You must promptly disclose any changes that materially affect the
investment process. This does NOT mean you have to discuss prior
investment process, only the CHANGE.1. description of new model2.
limitations of the model
1. Diversification is expected2. Risk Return Profile3. Excessive
trading should be avoided4. Current income should be balanced for need
for growth5. Trustees are allows to delegate authority
1. Must be consistent with the firm's actual STYLE. If returns were
achieved using a different method, can not market this to clients
Must always be disclosed either on report or website. Recommended to do both.
This is where the usage is both for decision making and general
management in the firm (such as bloomberg terminal). Can only allocate
the amount of soft dollar used for INVESTMENT decision making.
Research includes both Proprietary and Third-Party research and must
directly assist investment manager in decision-making process and NOT in
the general management in the firm (such as preparing investor
statements, etc).
This are completely voluntary acts. Once you claim compliance you must follow them completely.
Should NOT be one dimensional (staying to buy, and thats it).1.
Absolute or Relative (under/out perform). If relative you must state the
benchmark.2. Time Horizon which identifies period which expected price
target would be sustained.3. Risk categories (level of risk).Must also
state/disclose where to get the complete rating system on request.
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