How to deal with draconian personal trading restrictions when working in a Wall St bank
August 5, 2012 7:27 PM Subscribe
I've just accepted a job at a large Wall St bank. I have a large amount of cash to allocate at the moment and don't want to leave it in the bank earning zero interest. However, I am designated a "sensitive person" for compliance purposes in the new job and am subject to very severe restrictions on personal trading. How do people in similar situations manage their personal finances?
posted by kramer1975 to work & money (7 answers total) 5 users marked this as a favorite
In short, the rules at my new job include not only the usual need to get preclearance from compliance for any personal trades, but I am required to get written approval from both my line manager AND the head of my department for any new trades/investments. For some mystifying reason this even applies to ETFs.
To be clear, I am not asking how to get away with insider trading. My position is in economic research -- I do not cover individual stocks at all. Over the past several years I have traded small cap stocks on the side as a hobby -- these are mostly tiny stocks that have no coverage by big banks. So I see no reason why I can't continue this on a limited basis. If not, I would be happy to simply trade index ETFs, but even then I need multiple approvals.
Anybody out there have experience handling similar dilemmas?
At the moment I'm thinking my options are:
- Keep to a couple of trades a month (mostly in ETFs). And hope that my line manager/dep head won't mind being bugged for approval. I am understandably reluctant to go this route as I'm not sure how it will reflect on me and don't particularly want my manager to know all the details of my personal finances. Am I overthinking this though? Are these manager signoffs just a formality and something that everyone does?
- Avoid individual ETFs/securities and purchase mutual funds or index funds directly from someone like Vanguard (I hate mutual funds, but what choice do I have?). Technically I think I would still have to report this, but since its not going through a brokerage I can't see how they would ever find out.
Once again, I'm not looking to do anything untoward here, but am just trying to figure out the best way to manage my personal finances with minimum hassle within a system that seems ridiculously restrictive given my lack of access to sensitive information.
Any ideas welcome.