AuthorTopic: Ethics quick question
@2017-08-06 17:08:12
Could someone please help me understand how to arrive at an answer to this question I came across?

A offers emerging mkt research for B in exchange for prospective client referrals and Euro equity research. Clients of A are not made aware of the arrangement with B, but clients rave about high quality research from B. As a result of that research, non-discretionary account clients make a load of money. Managers at A also have used the research to earn money for their discretionary accounts. A most likely:
1. not violated code and standards
2. violated code and S by using 3rd party research in discretionary accounts
3. violated code and S by failing to disclose referral agreement with B.

So I am wondering, a client would have made money in emerging mkt or Euro equity. Even though they are clients of A, they seem to know that Euro research comes from B. And they get their emerging mkt research from A (although A is giving that research to B, why would it want clients to belive that research is coming from B?). So why is there a violation if they make money from either research? The answer apparently is 3.
@2017-08-07 05:13:11
It says "Clients of A are not made aware of the arrangement with B" so apparently, A passes on B's research as his own. Not cool. You do not mislead your client about your abilities and have to disclose if you are using another's research, repackaging research of lots of other people, using research of someone else in your own company etc.

CFA Discussion Topic: Ethics quick question

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Edward Liu

Edward Liu