NUMBER 213 1923

Question. A and B are co-partners in the general practice of the Jaw. A is the holder of a substantial portion of the capital stock of the D corporation. The D corporation, in turn, is the owner of all of the capital stock of the E corporation, The D corporation is engaged in a general manufacturing business, and the E corporation is engaged in the purchase and sale of bonds and other securities. When A and B as a co-partnership are requested to assist or advise in the purchase of securities for clients, is there any impropriety in purchasing such securities through the E corporation, which would make a profit on such transactions, provided always that the client pays no greater price than would be paid through any other brokerage house, and provided further that the recommendations of the partnership as to such securities are not influenced by the character of securities that the E corporation may at that time be desirous of purchasing or selling? In other words, if the partnership exercises entire good faith in its recommendations and efforts on behalf of clients, does the indirect financial interest of A in the E corporation make it improper for such transactions as are above enumerated to be handled through said corporation?


Answer. In the opinion of the Committee, a lawyer should not advise the employment of a company in which he has a personal interest for the purpose of making investments for the client, without fully and fairly informing his client of his interest in the company.