Bans on personal accounts - for those working at Credit Funds / CLOs / Alternative Investments

Based on the most helpful WSO content, here are some insights regarding personal account trading restrictions at MBB and investment banks:

1. Personal Account Trading Restrictions at MBB:

   • Pre-clearance: All trades typically need to get pre-cleared with compliance. This includes indices and ETFs.
   • Brokerage Restrictions: Employees may need to use specific brokerages approved by the firm.
   • Types of Trades: Generally, employees are restricted to long-only trades and may not be allowed to short stocks or trade options. There might be a minimum hold period for each trade.
   • Blacklist: Compliance usually maintains an internal list of clients and securities that employees are prohibited from trading due to ongoing mandates. This list can be extensive, often including popular blue-chip stocks like MSFT, AAPL, and AMZN.
   • Firm Sentiment: Personal trading is often viewed with caution, and many employees might prefer to invest in diversified ETFs to avoid compliance issues.

2. Investment Banking Compliance Rules:

   • Equity Trading: It is often next to impossible for employees to buy and sell equities once they start the job due to stringent compliance rules.
   • Alternative Investments: Employees might look at alternative investments as good options due to the restrictions on equity trading.

3. General Sentiment on Personal Investing:

   • Index Funds: Many professionals, including those in investment banking and consulting, prefer investing in index funds due to their low costs, broad diversification, and ease of management.

For specific details on bans at credit funds, CLOs, or alternative investments, the general trend suggests that larger, more established funds (megafunds) are more likely to have stringent prohibitions on personal account trading, while smaller and medium-sized funds might have more lenient policies. However, this can vary significantly by firm and should be verified with the specific fund's compliance department.

Sources: Personal Account Trading Restrictions at MBB, Personal Investing: 4 Reasons Why 3 Funds Are All You Need, What do Investment Bank Employees Invest In?, Why doesn't everyone invest in index funds?, Is value investing dead?