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IBBC CAPITAL ACADEMY / 2027

Conflicts, personal dealing and referral economics

Independent IBBC Capital draft content for self-study. Not affiliated with or endorsed by CFA Institute. New lessons await subject-matter review. No CFA designation or official PSM credit is awarded.

Learning goals

  • Explain conflict treatment using mechanisms and limitations.
  • Explain priority using mechanisms and limitations.
  • Explain referral transparency using mechanisms and limitations.

Draft · approximately 25 minutes, excluding further revision.

Conflict treatment

Avoid conflicts or make full, fair and prominent disclosure of matters that can impair independence or duties; disclosure must be understandable and updated when material facts change.

Security ownership, issuer relationships and compensation arrangements can create conflicts even without proven harm; evaluate potential influence before recommending an action.

Priority

Client and employer transactions take priority over transactions in which the professional has beneficial ownership; preclearance helps prevent front-running and allocation abuse.

Family accounts with beneficial interests require careful treatment under the same priority principles; a different account name cannot conceal personal benefit.

Referral transparency

Referral compensation should be disclosed to the relevant employer, clients and prospective clients as required, including its nature and value basis; a small payment is still an incentive.

A control framework can combine restrictions, disclosure, review and monitoring; no generic disclaimer cures an undisclosed transaction-priority violation.

Formula and assumptions

Conflict response: avoid or disclose effectively; prioritize client/employer trades; disclose referral arrangements

Original applied case: Conflicts, personal dealing and referral economics

  1. A fictional analyst plans to buy a recommended stock personally just before sending a recommendation to clients.
  2. Assess transaction priority and preclearance before trading; disclosing ownership after the fact does not retroactively cure priority abuse.
  3. Provide relevant conflict disclosure and follow allocation and restricted-list procedures for the actual circumstances.

Errors to catch

  • Do not assume: Only conflicts that already caused losses need disclosure.
  • Do not assume: Ownership cannot affect recommendation independence.
  • Do not assume: Personal trades should always precede client orders.

Original knowledge check

Answer every question before checking. Review explanations after submitting; retry starts a new attempt.

Sources and coverage status

These original lessons are drafts. Public outlines are used to check scope; the official learning-outcome text and proprietary question banks are not reproduced here. Follow the source for exam-year requirements and updates.