Question

Which of the following would probably NOT be considered a conflict of interest? (check all that apply)

a. Using a bank-owned brokerage affiliate to perform securities trades at the discretion of the owner of a custodial IRA.
b. Retaining own-bank stock in a trust account that was established through the settlement of an estate.
c. Implementing a policy giving 25% reduction in the first years fee for any officer or employee of the bank who opens an individual retirement account or investment management account.
d. Using a full-service brokerage firm for securities trades because the broker provides investment research services, even though the commission rates are slightly higher than a discount internet brokerage.

Answer 1

Retaining own-bank stock in a trust account that arose from an estate settlement is likely not a conflict of interest as it follows pre-set estate instructions. Other scenarios may imply personal gain or decisions biased by benefits to the bank's personnel or the bank itself, which constitute potential conflicts of interest. The correct option is B.

Step-by-step explanation:

The scenario that would probably NOT be considered a conflict of interest is retaining own-bank stock in a trust account that was established through the settlement of an estate. This is because it typically reflects the execution of predefined instructions pertaining to the estate and does not directly involve decisions made for personal gain or conflicting interests.

Furthermore, offering a discount to officers or employees of the bank for opening an account could promote a conflict of interest, as it could lead to biased decision-making to benefit personally from the discount. Using a full-service brokerage firm for the sake of investment research services, despite somewhat higher commissions, could also be a potential conflict if cheaper alternatives were disregarded without proper justification, affecting the interest of clients.

Lastly, using a bank-owned brokerage could imply a conflict of interest if it's done to benefit the bank over the client's best interest.