Ethics Q - I don't get it

After extensive research, Ken Griffey Jr, CFA purchased 500 shares of a public company for his personal account. He then posted messages on several Internet forums stating: “I have performed extensive research and this stock is going up. You would be crazy to sell it.” According to the standards of practice handbook he violated: a) conflicts of interest and integrity of capital markets b) conflicts of interest but not integrity of capital markets c) integrity of capital markets, but not conflicts of interest d) he did not violate the standards There was a similar question on one of the CFAI Sample Exams the I got wrong… The CFAI answer was C. Do they really think one person on some Internet chat boards can actually affect the integrity of capital markets? Seriously? Am I missing something here?

he tried to influence the stock price

Without looking at the answer, I picked C Agree with what heha said, he tried to influence, if he succeeds or not that is a different matter but he tried to do something that is forbidden.

People talk about stocks on this forum all the time, are they in violation of the standards? Also it says he performed “extensive research”, he was not trying to artificially inflate the price, he was presenting a valid opinion. How is releasing a positive research report on a stock you or your firm owns any different?

He tells people that he performed extensive research, that proves his interest. If somebody would perform extensive research on me, I would become nervous:)

C: My reasoning was that he can’t guarantee performance, which he does by saying it will be going up. That may be the wrong reasoning, but its what my thoughts were before I saw the answer.

I think he would be fine if he would state “my opinion is that the stock is going up”, because opinions are fine. Saying it is going to go up is not.

tvPM Wrote: ------------------------------------------------------- > I think he would be fine if he would state “my > opinion is that the stock is going up”, because > opinions are fine. Saying it is going to go up is > not. That was my thinking as well.

yeah C, some people would pick conflict of interests but that is nothing about clients here in GENERAL, posting on message boards is not a good thing

It is not about opinion or guarantee returns, etc, because that’s not what option “C” is. So, unfortunately if you picked C with this justification your answer is wrong, although you will get the point for it :slight_smile: This is about market manipulation.

Dreary Wrote: ------------------------------------------------------- > It is not about opinion or guarantee returns, etc, > because that’s not what option “C” is. So, > unfortunately if you picked C with this > justification your answer is wrong, although you > will get the point for it :slight_smile: This is about > market manipulation. exactly. thsi guy bought stock, then went on a board to “pump it up” to make $. CFAI dont like that

yes but it would not be market manipulation if he stated it was his opinion, that is what I am stating. It was market manipulation because he did not state it was an opinion.

It doesn’t matter… he is still trying to manipulate the market. Opinion is expressed with clients, not on public boards, I think that’s what CFAI wants to hear.

Also got the concept under C without looking at replies. Market manipulation… no no!

Well…that conflicts a bit with the scenario that John Doe gets on a public board and says the CFAI is limiting the # of passes or slamming them. According to the Standards that is acceptable because you can state your opinion on matters. That is the vein I was running in, but I see it your way as well. Bottom line, C is right, I dont care the reason for it today or on exam day as long as somehow my answers are the correct ones…I love Multiple Choice!