Investment Restrictions for Associates

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Investment Restrictions for Associates

Postby Anonymous User » Tue Aug 07, 2018 12:17 pm

Soon-to-be first year at NYC biglaw. I recall vaguely from a conversation with an associate that whenever we plan to invest in the stock market, we need to report that to the partners to avoid any conflict of interest. Can anyone help confirm this? Having the partners see my investment portfolio sounds a bit weird. Also, big law firms work for a lot of big name companies. Are we prohibited from buying shares of all the firm's clients?

BTW, I know the conventional wisdom is to invest in an index fund, but let's put that aside for now.

Thanks for any input.

legalpotato

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Re: Investment Restrictions for Associates

Postby legalpotato » Tue Aug 07, 2018 12:43 pm

IME, yes to all. Have to report any individually held stocks. And, as you point out, this is typically NBD because any associate with a brain will be in index funds anyways. I could see how this rule would get annoying, though, if you were a partner.

Neff

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Re: Investment Restrictions for Associates

Postby Neff » Tue Aug 07, 2018 12:43 pm

Anonymous User wrote:Soon-to-be first year at NYC biglaw. I recall vaguely from a conversation with an associate that whenever we plan to invest in the stock market, we need to report that to the partners to avoid any conflict of interest. Can anyone help confirm this? Having the partners see my investment portfolio sounds a bit weird. Also, big law firms work for a lot of big name companies. Are we prohibited from buying shares of all the firm's clients?

BTW, I know the conventional wisdom is to invest in an index fund, but let's put that aside for now.

Thanks for any input.


Yes, this is standard. This is to prevent insider trading issues.

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Re: Investment Restrictions for Associates

Postby Anonymous User » Tue Aug 07, 2018 12:51 pm

Virtually all New York biglaw firms will make you sign an official securities trading policy, where you'll need to clear trades with an in-firm committee to the extent you're picking stocks. Insider trading is a major concern of major firms.

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Re: Investment Restrictions for Associates

Postby Anonymous User » Tue Aug 07, 2018 12:51 pm

you'll sit through a very boring seminar on this in your first week.

basically you send an electronic form to the securities review group, adn then they will check it against a confidential list of no-trade securities, then you get 48 hours or so to make the trade otherwise you need to re-seek approval.

It's not a big deal, but there are certain types of securities trading and derivaties that you cannot do. again, the policy will list these.

finally, just because your firm "works for a lot of big name companies" does not mean at all that you can't buy shares of those clients. it just depends on what is going on, and what non-public information the firm currently possesses.

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Re: Investment Restrictions for Associates

Postby Anonymous User » Tue Aug 07, 2018 12:53 pm

Yes, it varies from firm to firm. Sometimes you have to enter any proposed trades into a program, other times you need to get approval from a firm committee, or others just bar any trading entirely. At my firm approval is required for any trade for a publicly traded company, not just a trade involving a firm client. I suspect that any request to buy shares of a major firm client would be denied. Index funds and fixed income are usually exempted.

ruski

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Re: Investment Restrictions for Associates

Postby ruski » Tue Aug 07, 2018 1:11 pm

legalpotato wrote: I could see how this rule would get annoying, though, if you were a partner.


wtf. because partners are known to day trade on the side due to the excellent experience they have accumulated valuating companies?

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Re: Investment Restrictions for Associates

Postby Anonymous User » Tue Aug 07, 2018 1:19 pm

OP here. Thanks for all the responses. Now I see that being a biglaw associate insulates you from the stock market *to varying degrees*, which can be a good thing.

Anonymous User wrote:Index funds and fixed income are usually exempted.


Actually I am hoping to do some dollar-cost averaging investment. Does that count as fixed income?
Last edited by Anonymous User on Tue Aug 07, 2018 1:24 pm, edited 1 time in total.

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Re: Investment Restrictions for Associates

Postby Anonymous User » Tue Aug 07, 2018 1:24 pm

Damn, I hadn't thought about this much. I like to day trade for fun (basically like gambling) and I feel like these policies will completely end that for me

ruski

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Re: Investment Restrictions for Associates

Postby ruski » Tue Aug 07, 2018 3:12 pm

Anonymous User wrote:OP here. Thanks for all the responses. Now I see that being a biglaw associate insulates you from the stock market *to varying degrees*, which can be a good thing.

Anonymous User wrote:Index funds and fixed income are usually exempted.


Actually I am hoping to do some dollar-cost averaging investment. Does that count as fixed income?


I don't see how that is possibly fixed income. it for sure is legal and not insider trading since you're buying blindly basically, but that won't matter. law firms will restrict you from buying just not to open a possible investigation. law firms have a very high threshold here. their goal isn't just to prohibit insider trading, but to prohibit anything that MIGHT LOOK like insider trading to an outsider



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