CFA Level I · CFA Level I Exam · Guidance for Standard VI: Conflicts of Interest
An analyst's firm permits participation in equity IPOs by investment personnel. Before applying for shares in a hot IPO for her own account, the analyst most likely should:
She should preclear her IPO participation with the firm. Where policies permit IPO purchases, preclearance is expected even without an apparent conflict, and family accounts count as personal transactions, so they cannot be used to avoid the requirement.
- Await until the IPO lists and then buy in the market
- Bpreclear her participation, even if no conflict with clients seems to existCorrect
- Capply through her spouse's account to avoid personal reporting
Explanation
When firm policy permits IPO participation, members should preclear it even where no conflict appears. Using a spouse's account is wrong because personal transactions include those of immediate family members and accounts with an indirect interest.
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