ER and Your Personal Investments

MagnusRex's picture
Rank: Chimp | 6

I'm an engineer looking to potentially break into finance, and specifically ER. There are plenty of articles on wannabe engineers-to-finance, so I'll leave anything pertaining to that off for now. What I want to specifically ask is related to my personal situation.

I currently manage a sizeable sum of my family's wealth through a family investment partnership (When I mean sizeable, I mean sizeable to the real world, not to Wall St, though I'm still damn proud of it). Since I work in technology, I don't have to deal with any specific potential regulations like I would working in ER. As an associate or analyst, what sort of limitations do you have regarding your personal investments? Are you required to provide disclosure to all investment decisions you make whenever you make one?

Thanks in advance for any responses. SB's are limited but I'll give one out to the most well-informed answer.

Comments (8)

Oct 18, 2012

my merill brokerage account is linked to my firm, they see every trade I make. Anything that my firm covers can be traded as long as it's approved, i hold for 15 days and it's in a company brokerage account.

All other stocks can be bought without approval but there is still a 15 day holding period but they can be bought in an outside brokerage account.

Options are a no no.

Oct 19, 2012

All trades have to be approved by compliance. You have a minimum holding period that is firm dependent. You can't invest in any name in your sector or any names on the watch list.

Oct 19, 2012
bearing:

You can't invest in any name in your sector or any names on the watch list.

You must have passed the Series 87 on your 2nd try. Industry rules state that you cannot invest against your recommendation i.e. BUY-rated by firm and you short. However, most firms won't let you invest in companies you cover because that constricts the firm's ability to change ratings/recommendations and its reputation/perception. Analyst ownership is disclosed on every published report; wouldn't you be skeptical if an analyst was pounding the table in favor of his/her position?

You will have to get your trades pre-approved by compliance/DOR; trades will be rejected if the security is on the firm's watch/restricted trade list. Some firms may also restrict companies in complementing industries/sectors, well-phrased by -West Coast rainmaker-.

But it's OK. Just find a triple levered ETF that has a 90% correlation to your subject company. In most cases, indices/ETFs are ok.

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Oct 19, 2012

And they are serious about sector (at least at my firm). If you cover large cap US banks, you couldn't invest in a thrift. Or if you cover cell towers, you can't invest in service providers.

Oct 19, 2012

Whoa there champ. Word of advice do some due diligence before you start throwing out accusations, this is ER. At my firm you can't invest in any of your names or any names in your sector period. The conflict of interest is enormous if you did and would severely compromise your independence.

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Oct 19, 2012
bearing:

Whoa there champ. Word of advice do some due diligence before you start throwing out accusations, this is ER. At my firm you can't invest in any of your names or any names in your sector period. The conflict of interest is enormous if you did and would severely compromise your independence.

But your roommate with an optionsxpress account... Actually I wouldn't be surprised if this has happened before.

Oct 19, 2012

We were pretty loose with this from what you guys are saying. Only rules were you can't buy anything you reasonably expect that the fund will be buying or looking into at the same time. I continue to manage most of my family's investments and retirements on the side and as long as you're not front-running there's kinda an element of trust there. The bigger the shop the more hardcore compliance has to be though I imagine. Then again I haven't worked at a lot of places yet either.

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Oct 19, 2012
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