Ethical obligations of supervisors
Ahmed Jamal, CFA, head of research for Valley Brokers, decided it was time to change his recommendation on D&R Company from buy to sell. He orally announced his decision during the Monday staff meeting and said his written report would be finished and disseminated to Valley’s customers by the middle of next week. As a result of this announcement, Doris Smith, one of Jamal’s subordinates, immediately sold her personal shares in D&R, and Martin Temple told his largest institutional customers of the change the following day. Which Standards have most likely been violated?
The answer key claims Jamal was in violation of “Standard IV(C) Responsibilities of Supervisors” on the basis that Jamal failed to properly supervise employees and provide adequate procedures and policies to prevent employee violations.
What kind of measures is the CFAI looking for to Jamal to take? From a layperson’s standpoint, if Doris and Martin want to pull those stunts, that’s on them.
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