{"id":882,"date":"2019-10-10T20:04:00","date_gmt":"2019-10-10T20:04:00","guid":{"rendered":"https:\/\/analystprep.com\/cfa-level-1-exam\/?p=882"},"modified":"2025-04-18T10:35:30","modified_gmt":"2025-04-18T10:35:30","slug":"standard-6b-priority-transactions","status":"publish","type":"post","link":"https:\/\/analystprep.com\/cfa-level-1-exam\/ethical-and-professional-standards\/standard-6b-priority-transactions\/","title":{"rendered":"Standard VI(B) \u2013 Priority of Transactions"},"content":{"rendered":"\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"VideoObject\",\n  \"name\": \"Standard VI \u2013 Conflicts of Interest (2024\/2025 Level I CFA\u00ae Exam \u2013 Ethics \u2013 Module 3)\",\n  \"description\": \"This video lesson covers Standard VI: Conflicts of Interest from the CFA Level 1 Ethics curriculum. It explains the importance of disclosure, priority of transactions, referral fees, and how professionals should identify and manage potential conflicts to maintain objectivity, transparency, and protect clients\u2019 interests in investment recommendations and analysis.\",\n  \"uploadDate\": \"2022-08-27T00:00:00+00:00\",\n  \"thumbnailUrl\": \"https:\/\/i.ytimg.com\/vi\/ed0Apg79UWs\/hqdefault.jpg\",\n  \"contentUrl\": \"https:\/\/www.youtube.com\/watch?v=ed0Apg79UWs\",\n  \"embedUrl\": \"https:\/\/www.youtube.com\/embed\/ed0Apg79UWs\",\n  \"duration\": \"PT19M03S\"\n}\n<\/script>\n\n\n\n<p>[vsw id=&#8221;ed0Apg79UWs&#8221; source=&#8221;youtube&#8221; width=&#8221;611&#8243; height=&#8221;344&#8243; autoplay=&#8221;no&#8221;]<\/p>\n<p>Standard VI(B) \u2013 Priority of Transactions specifies that investment transactions for clients or employers must take precedence over investment transactions for a CFA member.<\/p>\n<h2>Compliance<\/h2>\n<p>Reinforcing loyalty to clients, Standard VI(B) \u2013 Priority of Transactions clearly indicates that the order of transaction priority is (1) clients, (2) employer, and (3) member.<\/p>\n<p>Nothing is inherently wrong with an investment professional making money from investments, so long as a client is not put at a disadvantage by a trade or an investment professional does not benefit personally from transactions undertaken for clients. This includes not making recommendations to clients or employers because a member wants to benefit personally from an investment.<\/p>\n<p>A conflict may also arise when holding an account in the name of a family member. For example, perhaps an investment professional is tempted to make trades for a short issue, thereby preventing clients from investing in the same issue. For this reason, a member\u2019s interests are extended to direct family, as well as any account in which a member may have a pecuniary interest.<\/p>\n<h2>Violation<\/h2>\n<p>To prevent the violation, a firm should adopt a policy that includes the following elements:<\/p>\n<ol>\n<li>Limit personal investment in IPOs.<\/li>\n<li>Put restrictions on private placements (i.e., venture capitalist deals).<\/li>\n<li>Establish black-out periods in which investment professionals cannot transact for their personal portfolios, thereby ensuring transactions are first placed on behalf of clients and\/or employers.<\/li>\n<li>Require reporting by personnel of securities holdings and transaction timelines. This may also include requiring brokers to provide to employers duplicate receipts for all transactions.<\/li>\n<\/ol>\n<blockquote>\n<h2>Question<\/h2>\n<p>An allocation of shares from an oversubscribed IPO are made to Todd Blanco.\u00a0 He plans to distribute the shares evenly among his clients, one of which is his sister-in-law.\u00a0 Blanco allocates shares to his sister-in-law first 24 hours before he distributes shares to the rest of his clients.\u00a0 Which statement is most likely true about Blanco?<\/p>\n<p>A. He is in violation of Standard VI(B) \u2013 Priority of Transactions because he favored one client over others.<\/p>\n<p>B. He is not in violation of Standard VI(B) \u2013 Priority of Transactions because he eventually made an equal distribution of shares for the oversubscribed IPO to all clients.<\/p>\n<p>C. He is not in violation of Standard VI(B) \u2013 Priority of Transactions because his sister-in-law is not a blood-relative.<\/p>\n<h5 data-tadv-p=\"keep\">Solution<\/h5>\n<p>The correct answer is A.<\/p>\n<p>Blanco is in violation of Standard VI(B) \u2013 Priority of Transactions by acting in a way that may benefit himself over clients. Nothing is inherently wrong, so long as a client is not put at a disadvantage by a trade or an investment professional does not benefit personally from transactions undertaken for clients.\u00a0 In this case, we can assume his actions have an indirect benefit to himself.\u00a0 The timeline of a 24 hours lag in investment for other clients may lead to a disadvantage to them.<\/p><\/blockquote>","protected":false},"excerpt":{"rendered":"<p>[vsw id=&#8221;ed0Apg79UWs&#8221; source=&#8221;youtube&#8221; width=&#8221;611&#8243; height=&#8221;344&#8243; autoplay=&#8221;no&#8221;] Standard VI(B) \u2013 Priority of Transactions specifies that investment transactions for clients or employers must take precedence over investment transactions for a CFA member. Compliance Reinforcing loyalty to clients, Standard VI(B) \u2013 Priority of&#8230;<\/p>\n","protected":false},"author":18,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3],"tags":[],"class_list":["post-882","post","type-post","status-publish","format-standard","hentry","category-ethical-and-professional-standards","blog-post","no-post-thumbnail","animate"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Priority of Transactions | CFA Level 1 - AnalystPrep<\/title>\n<meta name=\"description\" content=\"Learn how CFA members must prioritize client and employer investment transactions over their own, ensuring ethical financial practices.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/analystprep.com\/cfa-level-1-exam\/ethical-and-professional-standards\/standard-6b-priority-transactions\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Priority of Transactions | CFA Level 1 - 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