According to Standard II(A), prohibition against the use of material nonpublic information, which of the following statements is least accurate? Members who possess material nonpublic information related to the value of a security are expected to: A) not trade on the information. B) make reasonable efforts to insure the information’s accuracy before recommending that others trade on the information. C) not trade on the information unless it was arrived at through the “mosaic theory.” D) make reasonable efforts to achieve public dissemination of the information.
B. Seems too obvious.
c?
that is correct. I misread the “least accurate” part on the question and selected C
I misread “least accurate” as well. I would say B
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cpk123 Wrote: ------------------------------------------------------- > According to Standard II(A), prohibition against > the use of material nonpublic information, which > of the following statements is least accurate? > Members who possess material nonpublic information > related to the value of a security are expected > to: > > A) not trade on the information. > > B) make reasonable efforts to insure the > information’s accuracy before recommending that > others trade on the information. > > C) not trade on the information unless it was > arrived at through the “mosaic theory.” > > D) make reasonable efforts to achieve public > dissemination of the information. B is the least accurate
Can someone please explain why D is an accurate statement? The way I read D, it seems to insinuate it is the responsibility of the analyst to raise public awareness once inside information is known. For example, if an analyst overhears a CEO at a dinner party tell his brother he is being indicted for fraud… does the analyst have to attempt to disseminate this information to the public? If not, why is D an accurate statement?
Choose the greater of 2 evils…B I do not believe you are expected to do D if you have MNPI…but even if you did, you are not directly violating any standards. B you are telling others to trade on the information…direct violation. This looks like an easy level question…
apcarlso, cfai handbook quote: page 40 If a member or candidate determines that information is material, the member or candidate should make reasonable efforts to achieve public dissemination of the information. This effort usually entails encouraging the issuer company to make the information public. If public dissemination is not possible, the member or candidate must communicate the information only to the designated supervisory and compliance personnel within the member or candidates firm and must not take investment action on the basis of the information. Moreover, members and candidates must not knowingly engage in any conduct that may induce company insiders to privately disclose material nonpublic information.
apcarlso: when they say make reasonable efforts to achieve public dissemination of the info…it means that the analyst should urge that CEO or whoever has that MNPI to disseminate the info publicly via publication, conference, etc. This doesn’t mean the analyst should disseminate the information–that would be a violation.
Aha. Thanks for the insight Bart & Amtrak…