| Description |
One of the discretionary accounts managed by Farnsworth is the Jones Corporation employee profit-sharing plan. Jones , the company president, recently asked
Farnsworth to vote the shares in the profit-sharing plan in favor of the slate of
directors nominated by Jones Corporation and against the directors sponsored
by a dissident stockholder group. Farnsworth does not want to lose this account, because he directs all the account’s trades to a brokerage firm that provides Farnsworth with useful information about tax-free investments. Although
this information is not of value in managing the Jones Corporation account, it
does help in managing several other accounts. The brokerage firm providing
this information also offers the lowest commissions for trades and provides
best execution. Farnsworth investigates the director issue, concludes that the
management-nominated slate is better for the long-run performance of the company than the dissident group’s slate, and votes accordingly. Farnsworth: |