Andrew Mader, CFA, is an analyst with Metro Investment Services. During lunch with some of Metro’s managers, Mader is told, "There are going to be major problems at Gebco (a firm that Metro had brought public last year). I was just over there and the place is just crawling with government inspectors.” Mader had just issued a report with a “buy” recommendation on Gebco last week. Mader should: A) not do anything because to do so would violate his obligation to preserve confidentiality. B) without further research, immediately issue a new report reversing his previous recommendation. C) immediately issue a new report, but only after stopping by Gebco himself to corroborate the story. D) not do anything to avoid a violation of fair dealing.
He should not do anything since this information is based on his managers hunch. But I can’t decide if A or D is better.
A or D. I go with A because fair dealing has nothing to do with it IMO
A for me. Looks easy, unless there’s a cruel twist to it.
Thinking A as well, however I feel that C could potentially be right since he potentially do something if the story turns out to be a real problem. What’s the answer?
B is incorrect since he would be violated the Due Diligence standard C is incorrect since he would be acting on material non public information D is incorrect since I dont know how Fair Dealing is related to this scenario… doesn’t fit.
The best answer I believe is ‘A’
C for me.
chad17 Wrote: ------------------------------------------------------- > B is incorrect since he would be violated the Due > Diligence standard > C is incorrect since he would be acting on > material non public information > D is incorrect since I dont know how Fair Dealing > is related to this scenario… doesn’t fit. Explanation for C doesn’t match with Schweser. They don’t say its material non-public info, but that it’s employer confidentiality
whats the correct answer?
I guess the asnwer is A. Is this what reasonable people do? First off, if the guy who was just over at Gebco is part of the IB group he shouldn’t be talking to the equity analyst about it at all. He has just put everyone in a heck of a pickle. Second, the equity analyst has some kind of duty to check out new information like this. If he is driving by Gebco on his way to work and a ton of SEC and FBI guys drive through the front gates, he better do something about this. It’s his freakin job to figure this stuff out.
Seen this before. Pretty sure the answer was A. But in reality…