Code of Ethics & Personal Trading
Access persons report holdings on joining and annually, and transactions quarterly.
What is Code of Ethics & Personal Trading?
Advisers must adopt a code of ethics. Access persons - those with access to nonpublic information about client trades or recommendations - file an initial holdings report within 10 days of becoming an access person (current within 45 days), annual holdings reports, and quarterly transaction reports within 30 days after each quarter ends. They need pre-approval to buy IPOs or private placements. The purpose is to catch trading ahead of, or against, clients.
Code of Ethics & Personal Trading: a worked example
An analyst joining an advisory firm reports all personal holdings within 10 days.
More terms in Ethics & Fiduciary Obligations
Form ADV Part 2 Brochure Delivery
Deliver 48 hours before the contract, or at signing with a 5-business-day exit.
Advisory Contract Requirements
Written, specific about fees, no assignment without consent, no waiver of rights.
Assignment of an Advisory Contract
Transferring a client contract requires the client's consent - including by change of control.
Performance-Based Fees & Qualified Clients
Allowed only for qualified clients: $1.4M with the adviser or $2.7M net worth (from June 29, 2026).
Prepaid Fees & Financial Requirements
Prepayment over $500, six months ahead, triggers net worth and balance sheet rules.
Custody
Holding, or having authority to obtain, client funds or securities.
Discretionary Authority
Deciding the asset, the amount, or buy versus sell - without asking first.
Third-Party Trading Authorization
Anyone other than the owner needs written authority to trade the account.