Beneficial ownership

Having the economic benefit of a security, whether or not it is held in one's own name; a family member's holding can count. Owning what one covers or recommends is a conflict to avoid where possible, or disclose.

Where you will meet it

Beneficial ownership appears in 3 learning outcomes on the CFA syllabus. A few of them:

• Put Standard VI(A), on avoiding or disclosing conflicts, into practice
  CFA Level I · Ethical and Professional Standards

  “Beneficial ownership of a recommended security, an investment banking relationship with a covered company and compensation arrangements are typical examples.”

• Explain the manipulative trading practices that live market monitoring can uncover
  CFA Level III · Portfolio Construction

  “Wash trading has the same beneficial owner on both sides to fake volume.”

• Put the Priority of Transactions standard, VI(B), into practice
  CFA Level I · Ethical and Professional Standards

  “Transactions for clients and employers must have priority over transactions in which a member is the beneficial owner.”

Practise it

• Today's practice question One question, with every wrong option explained.
• Free Level I diagnostic test Twelve questions that show which topics to start with.
• Free finance calculators Check your arithmetic on the exam's core formulas.

All terms beginning with B · Glossary