is this illegal?
this q may seem sophomoric and stupid, and i apologize in advance; i just want to get thoughts.
so my family friend is starting a hf, but is not hiring or anything yet; would it be wrong to run analyses, models, etc from time to time, on companies he is thinking about investing in? (free of charge) like, on a weekend when i don't have work, or something like that; just to get some insight/experience. i am currently an investment banker; also, there is a chance i may join this fund, in the future, but i am not sure about right after, as it is so nascent
As long as you don't work on any companies that you have material non-public information. I assume you have a list of companies that you couldn't personally buy given to you by the bank, just avoid those and you will be fine.
i plan on staying away from the restricted list once i find it
The issue here is how are you going to effectively have another job while doing banking? If you trust this guy and want to take the risk, then jump ship. Having one foot in and one out is only going to hurt you.
a) he knows my constraints, and he is a close family friend, so even if i mess up not a big deal; i am doing this moreso to learn, and to help out; also, i think i want to jump to a bigger place, not a startup fund
b) it has come to the point where i typically have most of my weekend free, and usually my nights available by 11; so even if i work for a few hours from 11-2 at home, and for the weekend, minus the 6-8 hrs of work i have on sundays or saturdays, it's very doable; i mean it's just taking a look at one company at a time, etc etc
doing other things while banking is def doable if you have the right schedule, like i do right now; i know someone who launched a startup while doing banking; now he's running it full-time. this is not to discount your comment ny; you bring up a very legitimate concern
to mitigate the 'what-if-you-mess-up' factor... how about analyzing his decisions/investments after the fact, to shed a different perspective while not providing him with potentially flawed analysis which could contribute to his decision?
I also think this would offer some additional protection from conflicts of interest. Its more just a way for him to get a different perspective/analysis on his decisions.
The whole thing is a very bad idea for a number of reasons, -According to most IB contracts you are expressly prohibited from business activities outside of your job -You may inadvertently work on something on a restricted list -Don't know whether or not you have your securities licenses, but analysis like this can require coverage by securities licensing -Providing advice and analysis outside your job to be used by anyone investing is a bad idea, you don't have the insurance, compliance or anything to help out if you get in trouble
These are a few off the top of my head, but seems like a bad idea
here are my rebuttals to your points (again, not discounting, but trying to figure out):
1) this is not true, as long as i am not deriving profit; also, even if i am, i just have to clear this with hr; think of all the MDs invested in pe funds, or on boards of companies? obviously this is different, but you get my drift 2) good point; that said, this could happen if i am helping my mom invest, for instance; or if i am investing myself 3) i think alot of hf analysts do not have Series 7/63; and again, i would be doing this informally, so would it matter? 4) again, this is informal; but you're right, overall, there is some need for concern.
will just discuss with my hr and compliance; prob the easiest way to fully figure out
i don't know, my contract was pretty strict on what i could or couldn't do outside of work. it basically states i have to get permission for everything
Look, 99% chance nothing is going to happen if it is as informal as you are making it seem but it sounds like you are just looking for validation for a decision you have already made.
As far as the clause about no moonlighting, it is not so much that they have to prove that you were earning money but that you were engaged in professional activities and that they affected your work (don't have my contract on hand).
And don't talk to your HR/compliance about it- their answer will be an emphatic no.
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