Compliance is CRUCIAL for all Financial Analysts

Chris Haroun
A free video tutorial from Chris Haroun
Award Winning MBA Professor, Venture Capitalist and Author.
4.5 instructor rating • 34 courses • 837,051 students

Learn more from the full course

The Complete Financial Analyst Training & Investing Course

Succeed as a Financial Analyst &Investor by Award Winning MBA Prof who worked @Goldman, in Hedge Funds & Venture Capital

22:31:28 of on-demand video • Updated April 2020

  • 22+ hour complete financial analyst course!
  • #1 Best Selling Investing Course on Udemy!
  • How to pick stocks.
  • Become an expert in Excel for financial analysts (no prior Excel knowledge is required).
  • How to manage a portfolio.
  • How an IPO works.
  • How to build financial models.
  • How to get hired and promoted as a financial analyst.
  • How risk management works.
  • How to use technical analysis.
  • How to value companies.
  • Use and create Excel based templates developed by Chris to help you create financial statements from scratch (meaning income statements, balance sheets, cash flow statements and more).
  • Use and create Excel based templates developed by Chris to help you value companies using several different valuation methodologies, including P/E, P/R and Discounted Cash Flow (DCF).
  • Use and create Excel based templates developed by Chris to help you manage a portfolio.
  • How Monetary Policy works.
  • How Fiscal Policy works.
  • How interest rates are changed and why this is crucial to understand for successful financial analysts.
  • How to pitch long and short ideas to portfolio managers.
  • How to find great venture capital investment ideas.
  • How to come up with mutual fund investment ideas (longs - meaning buys) using an easy to understand top down and bottoms up research process.
  • How to come up with hedge fund investment ideas (longs and shorts) using an easy to understand top down and bottoms up research process.
  • Identify crucial catalysts (timed events) in order to know when the optimal time is to buy or short a stock.
  • Understand how investment banks (the 'Sell Side') can help you be more successful in a hedge fund or mutual fund career.
  • Analyze and understand an income statement (even if you have no experience with income statements).
  • Analyze and understand a balance sheet (even if you have no experience with balance sheets).
  • Analyze and understand a cash flow statement (even if you have no experience with cash flow statements).
  • Understand and use modeling best practices so you can create financial models.
  • Know where to get data in order to build a financial model (in depth understanding of identifying and using/navigating the best free websites and sources to build your financial model)!
  • Create a financial model (projecting the future) for an income statement.
  • Other valuation methodologies, including EV/Sales, EV/EBITDA, P/B, EV/FCF, etc.
  • Create a financial model (projecting the future) for a balance sheet.
  • Create a financial model (projecting the future) for a cash flow statement.
  • Understand valuation best practices so you can create target prices based on your financial models.
  • How to use Discounted Cash Flow (DCF) and how to create the Weighted Average Cost of Capital and Terminal values in order to pick target prices.
  • How to use P/E in order to pick target prices.
  • How to use P/R in order to pick target prices.
  • Come up with a target price based on an average of several different valuation methodologies.
  • Learn about 14 different Financial Analyst jobs and how they overlap and work together (including Investment Banking, Venture Capital, Private Equity, Private Wealth Management etc.).
  • Investment Banking: Understand from a high level perspective what an Investment Bank is as well as what the role/job is of an Investment Banking Financial Analyst, including the pros and cons.
  • Venture Capital: Understand from a high level perspective what a Venture Capital firm is as well as what the role/job is of a Venture Capital Financial Analyst, including the pros and cons.
  • Private Equity: Understand from a high level perspective what a Private Equity firm is as well as what the role/job is of a Private Equity Financial Analyst, including the pros and cons.
  • Private Wealth Management: Understand from a high level perspective what a Private Wealth Management firm is as well as what the role/job is of a Private Wealth Management Financial Analyst, including the pros and cons.
  • Sell Side Research Analyst: Understand from a high level perspective what a Sell Side Research Analyst’s firm is as well as what the role/job is of a Sell Side Research Financial Analyst, including the pros and cons.
  • Sales Trader: Understand from a high level perspective what a Sales Trader’s firm is as well as what the role/job is of a Sales Trader Financial Analyst, including the pros and cons.
  • Buy Side Trader: Understand from a high level perspective what a Buy Side Trader’s firm is as well as what the role/job is of a Buy Side Trader Financial Analyst, including the pros and cons.
  • Mutual Fund: Understand from a high level perspective what a Mutual Fund is as well as what the role/job is of a Mutual Fund Financial Analyst, including the pros and cons.
  • Sell Side Trader: Understand from a high level perspective what a Sell Side Trader’s firm is as well as what the role/job is of a Sell Side Trader Financial Analyst, including the pros and cons.
  • Large Non Finance Company: Understand from a high level perspective what a Large Non Finance Company firm is as well as what the role/job is of a Large Non Finance Company Financial Analyst, including the pros and cons.
  • Equity Capital Markets: Understand from a high level perspective what an Equity Capital Markets’ firm is as well as what the role/job is of a Equity Capital Markets Financial Analyst, including the pros and cons.
  • Hedge Fund: Understand from a high level perspective what a Hedge Fund is as well as what the role/job is of a Hedge Fund Financial Analyst, including the pros and cons.
  • Equity Sales: Understand from a high level perspective what an Equity Sales’ firm is as well as what the role/job is of an Equity Sales Financial Analyst, including the pros and cons.
  • Tech / Artificial Intelligence: Understand from a high level perspective what a Tech / Artificial Intelligence’s firm is as well as what the role/job is of a Tech / Artificial Intelligence Financial Analyst, including the pros and cons.
  • Learn what finance role you are most passionate about pursuing.
English [Auto] The title this section is stay out of jail. I want to help you to be aware of legal issues to make sure that you and your family are protected. And I say this with all seriousness. I've unfortunately been surrounded by people at previous firms I've worked at that served time in jail and you know I've I've never personally broken any rules have always been ethical but unfortunately I've had people around me in some people who are friends who have broken the rules and I've actually got to visit them in jail as well. It's just terrible. I feel bad for them but I really want to protect you and help you and protect your family so you don't make these mistakes in so you really need to get to know your compliance officer. OK. Sometimes this isn't your best friend sometimes this is your only friend and they will guide you and tell you what's what's compliant and what's not compliant. And it's complicated in finance and there's so many ways to break the law without knowing it. And you can serve more time in jail in finance and you can for her for manslaughter even. So one should be aware of all the rules. And so in this course as with all courses I teach. I'm a firm believer of not teaching any theory. I want this to all be based on real life experiences I've had and I'm going to talk about 9/11 as well as financial analysts. I knew that that unfortunately went to jail. So let me also of medical perspective just kick it off with 9/11 and this one's kind of a tough one to talk about. But you can buy what's called a put option which makes you money when a stock goes down in value. OK. It's on September 6 of 2001. There were actually a couple of investors that bought massive massive put options on United Airlines and American Airlines and massive options to the extent that they've never seen boy like this before. And so what they did was a finance the horrific thing that took place with that potentially that's not going to speculate whatever but I bring this up because it's very important that if you see unusual activity you really have to tell your compliance director right away at the firm you work for in these activities I think were traced through a couple of accounts I think might have been in Eastern Europe. I'm not sure. But if you see something unusual you need to tell compliance right away. It's the ethical and right thing to do. And there aren't that many industries where you can actually know a bunch of people that went to jail in financial services is really one of them and in fact like I said before you can spend more time in jail by you know breaking a couple of rules you didn't think were rules than you can by committing more egregious crimes. So just please know the rules and what you can do is you know when you join a big company they're going to teach you the rules in fact when I joined Goldman Sachs back in 1998. They sat us all down and they said welcome of course. And they said that you have more of an opportunity to do harm than good at this company. Please never do anything that will get you or the firm on the cover of The Wall Street Journal. And I believe that Goldman is very ethical and I'm glad they did that. But despite the fact they do that you know some people still break the rules but just keep in mind that if you think that you might be breaking the law or somebody might you need to tell your compliance director right away. And they made us even when I joined Goldman as they do with all firms for people that work on the sell side on Wall Street you have to write what's called the Series 7 and the series 3 and 63 and there's other exams too. And these exams will tell you what's ethical what's not ethical but you're still not going to remember all the rules so just get to know your compliance officer very well. This will really help to protect you your firm your family. OK. And so here's an example I knew a guy who is a financial analyst that got arrested in the whole galleon scandal and it was it was really tragic. Apparently working at Gallion the founder of that firm Raj Rajaratnam would pay his analysts extraordinarily wealth to the extent that they made a lot of money and their children were in great private schools. They lived in posh apartments in New York City and they couldn't afford to get fired because they couldn't keep living that standard of living. And as a result some of them broke the rules. You can search the web on this. There's been a lot of press on this. You just got to be careful. You've got to be careful because nobody is untouchable. And Raj Rajaratnam is now in prison so why do people break the law all the time it's just duded debt. You know you want to give your family the best living you possibly can and of course you always need to live below your means. But I'm not going to go down that road and you just want to be careful and avoid yourself with people that break the law and you'll know who they are. It occurs it and I had a friend that served time in jail and I asked him what do you do wrong and he went to the hedge fund you know different hedge fund that I worked at. But he said Chris it was it was tragic. I was on the phone and somebody called me and told me something and I was having lunch and I wasn't really paying attention and I picked up another phone line and I kind of mentioned something about that conversation and he never told me what it was. But the FBI were listening. And as a result he he got arrested. So just be very very careful at all times get to know your place director. And even people like Martha Stewart you can google this as well. I mean she served time in jail as well for insider information. She received a stock tip that just be really really careful out there. And so compliance departments just protect you and your family and your reputation and they serve a very noble function and I respect them tremendously and I encourage you all to get to know them extraordinarily well thank you. OK so if you think you heard something about a company or an investment that you shouldn't have heard like something that was material and nonpublic you have to tell your compliance officer right away if you don't then you're not protecting your family and you know the stock of that firm will eventually be put on the restricted list at your company. And that means that no one can transact in it anyway just tell your compliance director immediately. And I find that business schools don't spend enough time on ethics. It's very easy to break the rules. So here's another way that people have gotten arrested. How many days does a quarter have. We know that it's gotten 90 days. Well there's a firm called Computer Associates which is in Long Island New York. It's a software company and the CEO spent I think at least 10 years in jail because each quarter didn't have 90 days. It actually had 95 days. And so the CEO would pull revenue forwards from the next quarter to this quarter. That's fraud. And you could sort of a lot of time in jail for that. Just be careful there as well. Just assume that all calls and e-mails are recorded in the finance industry. Just be safe just be safe and protect your family. And also there's there are some bizarre rules and finance you have to be aware of like there are some things you're not allowed by law to write in an e-mail and I'll give you examples if you work on the sell side. You work for an investment bank and you're working on an IPO. You're not allowed to e-mail contents or information on that IPO to your investors. If you can you can you can lose your job. There's many rules you just get to know them. And I've mentioned this before but the series seven other exams will help you to be responsible and not break the law. But it's easy to forget the laws as well. So again get to know your compliance director and when you're pitching a product you don't have to disclose all the major risks to your investors. And for me I've always taken pride in being very transparent with my investors. Transparency builds trust and you always want to disclose major risks to your investors within the first five minutes of pitching or discussing a potential product for them to invest in always be 100 percent transparent Again transparency builds trust and all you have in this industry is your reputation you're probably going to work out a number of different financial services firms over your career but the only thing you take with you from one company to the next is your integrity and so whenever you sell a product over the phone or in person to a potential investor you ask yourself what I feel comfortable having my parents buy this product as well. That's a good test to have. And there's many different ways to tell if you're a potential victim of fraud. A lot of the times when somebody is pitching you an idea you've got to ask yourself why am I being so why am I so lucky to be given this opportunity. Because quite often it might be because nobody else wants to buy that product so just be careful in finance and get to know your compliance director extraordinarily well. Thank you a bribe is more subtle than you think. And so if you work on the sell side and in many countries if you buy if you buy a government official anything you buy them dinner. That's a that's a federal offense. Bribing a federal official. And if sometimes if you spend more in a certain amount of dollars like a hundred bucks on a meal or a gift for a clients you're breaking the rules you're breaking the rules so just be careful this again if you don't know the rules. Ask your compliance director. Again the bottom line gets to know your compliance director. Always err on the side of caution.