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Case Studies
Neglecting risk factors
William is a fund manager who manages a number of Asian unit trusts comprising of low stake portfolios. Given the keen competition with his fellow fund managers in the company, he sets out to make the unit trusts in his care the star performing funds within a short period of time.
Although his clients have clearly specified a low risk mandate, William still invests a large proportion of the funds of his discretionary clients in emerging Asian countries, ignoring any warning signs of an economic downturn within the region. He even explains to the trustees of the unit trusts that the financial hiccup in some of the countries will soon be over. However, the financial turmoil quickly spreads across Asia causing the collapse of several stock markets. The unit trusts under William’s management suffer a tremendous loss.
Case Analysis
William manages the portfolios of his clients without due consideration of their risk profiles. He violates the *Codes of Conduct by ignoring the objectives of his clients’ portfolios and placing their interests at stake. He fails in his fiduciary duty towards his clients.
*Remarks: Codes of Conduct refer to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission, the Code of Conduct for Corporate Finance Adviser and the Fund Manager Code of Conduct.