Investment Advisor Mr. Juan Ayala Cubas has been an employee of BRG brokerage firm for more than
Question:
Investment Advisor Mr. Juan Ayala Cubas has been an employee of BRG brokerage firm for more than 6 years; he is currently an investment strategy advisor. Additionally, he obtained the AMIB certification for this position three years ago. Mr. Ayala manages a portfolio of more than $120,000,000.00 MXN of clients that he serves with portfolios made up of debt and equity instruments.
For some time he has been suggesting to several of his family members to open an investment account with BRG brokerage firm, since this company offers them better returns than keeping their money in bank products. Mr. Ayala limits himself to giving them recommendations to open investment strategies that the brokerage firm manages with its clients to meet long-term objectives, such as retirement funds.
On occasions, Mr. Ayala has faced the possibility of having problems with his family due to the possibility of undervaluations that equity assets may suffer, so he has chosen not to clarify the risk that exists in each type of investment, which prevents such possibilities from being fully understood and, consequently, assumed by his family members. This is so that the family-promoter relationship is not distorted.
In the last few days, Mr. Ayala has formed a group of friends to carry out the sessions called Investment Coffee; in them he explains to a group of 12 people how to invest in the stock market, taking into account that they do not have any knowledge in stock market matters. In the sessions, this advisor details the advantages and disadvantages of investing in the stock market through the opening of an account in the brokerage house where he works, and also makes recommendations on the instrument in which they should invest, depending on the objective pursued by each one, and the information he knows about the institutional clients he serves. The sessions have been so effective that most of his friends have already opened their accounts and carry out investment operations at BRG brokerage house.
Answer the questions below; you should consider the position assumed by Mr. Juan Ayala and the functions involved in his position.
What are the facts that evidence an ethical problem in the situation exposed?
What elements of honesty are present in this case?
What changes would you make in the way Mr. Juan Ayala operates, so that he behaves as an ethically responsible person with his family, clients and friends?
What are the lessons you learned from this situation?
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill