r2page 164, q43: about diligence and reasonable basis, the answer said Acertado did not violat it. but it is said that if the probability > 60%, then require additinoal research and Acertado did not do that q44: when acertado talk with Boswin, he did not tell what he heard in the elevator, he just told her about results he got by using Bowsin’s model. the conversation itself is not a leak of material non-public information. is it? Thanks.
Page 180 answer key about Q43 is C. Acertado violated CFAI Standards relating to material nonpublic information. Q44 is asking least likely violates, right?
first one, this is a clear violation of material nonpublic info. In the middle of pg 163 it says how the model gives a prob of 62%, slightly more than the 60% required to do more research, but given that the model is reliable and he checked his inputs, he was diligent. 44, yes, least likely, and Boswin is not a client, and suitability pertains to clients, so he did not violate this. He definitely violates the other ones cuz he’s blabbing all this material nonpublic info
when he called Browsin, he did not tell that non-public material information. AndrewUNH Wrote: ------------------------------------------------------- > first one, this is a clear violation of material > nonpublic info. In the middle of pg 163 it says > how the model gives a prob of 62%, slightly more > than the 60% required to do more research, but > given that the model is reliable and he checked > his inputs, he was diligent. > > 44, yes, least likely, and Boswin is not a client, > and suitability pertains to clients, so he did not > violate this. He definitely violates the other > ones cuz he’s blabbing all this material nonpublic > info
Yes, to me it seems Acertado violated standards related to diligence and reasonable basis. The model returned 62% and because he was running out of time, he did not do additional research.
How do we know for sure he violated material non public information?
The basis of his research was based on material non public info., so he would not have gone down the road of researching this company without it… So while he may not mention the MNPI he is compromising the capital markets…
Put it in another way.
If someone overhears something material (ABC earnings are going to be up 10%! from an insider) and then that person goes and phones a friend and says… “hey, I think this company ABC has some great fundamentals, buy it!”… and that person doesn’t actually disclose the private info, its still a violation. You are causing someone else to act on your non public info (even if the person is unaware that is what you are doing to them).