Steve Phillips is the new director of equity research for a brokerage company. He receives a call from a reporter at the Financial News, a weekly publication that comes out on Mondays. The reporter explains the relationship she had with his predecessor. They would share information that they both learned on stocks—the former director would benefit the company’s clients by news he obtained from the reporter in exchange for information he gave to her. The former director could ask her not to publish any information he gave her until after a certain date, ensuring that the brokerage clients would be informed before the publication date. After the conversation, Phillips called the former director, who confirmed that the reporter was trustworthy with respect to honoring the agreement for delaying publication until clients have been informed. Philips should: A) disclose research not yet disclosed to clients, as long as the reporter promises not to publish the information until after all clients have received the research, and the reporter provides valuable information of her own. B) disclose only research that he is sure will be disseminated to clients before the next publication date of the Financial News in exchange for the reporter providing valuable information of her own. C) only disclose research that has already been disseminated to clients, as long as the reporter is providing valuable information of her own. D) not disclose any research even after it has been disseminated to clients regardless of the value of the information that the reporter may have.
Answer is Choice C C) only disclose research that has already been disseminated to clients, as long as the reporter is providing valuable information of her own. Reasoning: Information released to the reporter will not contradict what the public already knows, and the manager is getting more information as a result. Given the manager has confirmed the reporter is reliable, this is the only choice here that makes sense.
I would pick C. The research info that has been disseminated to clients is no longer material nonpublic information.
I would pick D. In C, I don’t see a problem in disclosing the information to reporter. But the question on worthy ness of information provided by reporter.
i picked d. Why should the reporter get free research info without paying for it like the clients?
I think C is wrong because Phillips must dissociate, or separate, from the reporter who violated the standards.
whats the answer then?
TokyoBBB Wrote: ------------------------------------------------------- > i picked d. > > Why should the reporter get free research info > without paying for it like the clients? well the reporter is paying, not in dollars though
I agree with reema, the reporter is receiving a premium service, just like paying clients receive. At the same time, phillips is respecting the fair dealing and material non public information sections of the standard. Answer should definitely be C.
i picked D not sure though