Trading in personal accounts

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Jul 18, 2008 10:45 am
If an investment rep wants to buy a stock for himself personally and is also recommending it to clients, how much of a buffer should he leave between their purchase and his own purchase? 
 
I have heard that the industry standard is that a rep should not buy the same security on the same day as his clients.  IS THIS CORRECT?
 
My husband has been disciplined by his firm because of a situation involving this issue and we would appreciate hearing some perspective from others.
Jul 18, 2008 11:29 am

I think this is too techincal to discuss on a forum.  I would recommend you seek advice from FINRA.  I am sure it is addressed specifically (and as part of the S7 exam).  Also, why doesn't your husband just check his compliance manual?  It doesn't really matter what any of us think.

Jul 18, 2008 12:57 pm

I have a "friend" who has this burning and itching sensation... Sorry, I couldn't resist.

 
Why doesn't your "husband" just call his compliance department and ask them. Make sure he notes the answer, the date/time, and who he talked to.
Jul 18, 2008 2:20 pm

You all are missing the point here.  We KNOW what his very conservative, paranoid insurance firm's policy is.

 
I am trying to establish what OTHER more typical firms require in these instances.  In other words, what is the "industry standard?"
Jul 18, 2008 2:26 pm
RepWife:

You all are missing the point here.  We KNOW what his very conservative, paranoid insurance firm's policy is.

 
I am trying to establish what OTHER more typical firms require in these instances.  In other words, what is the "industry standard?"
 
Can you post a picture first, it might help?
 
 
Wait a day unless it's at a worse price than the clients.
Jul 18, 2008 4:33 pm

What are the details of your husbands actions that got him into trouble?

Jul 18, 2008 7:11 pm

Don't know what the deal is at your firm, but at my firm, if you buy or sell a security on the same day as a client, client always gets the best price.  Of course, if you hold something and tell a client to sell, regardless of why, and the stock goes in the broker's favor and the client finds out about it, get out your checkbook.  Best practice is not to sh*t where you eat.

Jul 19, 2008 2:43 am
Jul 22, 2008 9:10 pm

To answer the question of what other firms require, I know a friend a MS who was told by his branch manager that he could do it the same day as long as the trade was placed afterward so as to avoid "front running" which is a violation anywhere, although not much of a practical issue with small trades on large cap stocks. (The rule applies a lot of places even though a 100 share trade for BAC isn't going to lift the market before the rep can get in...)

Aug 19, 2008 4:58 pm

I would recommend that your husband review FINRA Interpretive Memo 2110-3 See http://finra.complinet.com/finra/display/display.html?rbid=1189&elementid=1159000472.  Also look at this case.  http://finraawardsonline.finra.org/turing.aspx?doc=40309 <?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />


This message should not be construed as legal advice.  However, if you need further assistance, please feel free to contact me.


 


Randall C. Place


The Law Offices of Place and Hanley, PLLC


[email protected]