An analyst provides services for a charitable organization and in return gets free membership in the organization. Part of her job is to manage the liquid assets of the organization, and those assets include stocks. Her supervisor in the organization calls her and tells her to buy a certain stock for the portfolio based upon insider information from a board member in the organization. The analyst objects, but the supervisor says this is what they have always done and sees no reason for changing now. The analyst complies with the request. With respect to Standards IV(A), Loyalty to Employer, and II(A), Material Nonpublic Information, the analyst violated: A) only Standard II(A) that prohibits insider trading. B) both Standards IV(A) and II(A). C) only Standard IV(A) requiring duty of loyalty. D) neither Standard since she is working for a charity. Your answer: B was incorrect. The correct answer was A) only Standard II(A) that prohibits insider trading. An employee/employer relationship does not necessarily mean monetary compensation for services. Complying with the request is a violation of II(A) which prohibits trading on insider information. Standard IV(A) Loyalty deals with going into business for yourself, leaving an employer and continuing to act in the employer’s best interest until their resignation becomes effective, and whistleblowing which means that the member’s interests and their firm’s interests are secondary to protecting the integrity of capital markets and the interests of the clients. She never said anything to her employer about the work, what the hell am I missing?
Snake’s nest.
it says an analyst provides services for a charitable organisation. i guess its understood… although it seems tricky though…
I dont think the actual exam questions will be this devious or tricky…
But she is doing something similar to her work.
Nib - nothing in the vignette says that she hasn’t disclosed working for this organization to her employer…so I think A is corrrect…
Certainly A. Better question would be is she in violation of loyalty if she doesn’t follower her employees request to purchase the stock. The answer to that would be no she isn’t in violation as its illegal. Reminds me of what my Dad used to tell me about the Army. That threre is a chain of command and you have to do what you’re told…but you are not allowed to follow an unlawful order.
Exactly, no pulling a Lynndie.