This one: An analyst has a large personal holding of a security, and he has just determined that market conditions warrant selling this security. The analyst contacts clients who have a position in the security and advises them to sell some or all of the security. After waiting 24 hours, he sells the security from his personal accounts. This is: A) a violation of Standard VI(B), Priority of Transactions. B) a violation of with Standard V(A), Diligence and Reasonable Basis. C) a violation of Standard III(B), Fair Dealing. D) congruent with Standard VI(B), Priority of Transactions. Your answer: A was incorrect. The correct answer was D) congruent with Standard VI(B), Priority of Transactions. Reason: According to Standard VI(B), an analyst must give clients the first opportunity to buy or sell a security before the analyst acts on his own behalf. A 24-hour waiting period seems reasonable under the circumstances presented. The analyst seems to have a reasonable basis, and there is no reason to believe that he is violating Standard III(B) since he contacted all of the clients who have a position in the security. Seems a silly question to me - what if he notified clients on Friday afternoon and submits is own trade on Monday morning? Who says that 24 hours is a reasonable period?
Priority of transactions just says to give clients a chance to trade first (then company, then personal). The only way this would have violated priority of transactions was if he sold before contacting client.
Where is this question from? reading through the standard in the CFA textbook. It suggests; “members or candidates may undertake transactions in accounts for which they are a beneficial owner only after their clients and employers have had an adequate opportunity to act on the reccomendation” No mention of 24 hours, in the current environment anything mentioned an hour ago could be seen as old news?
The point here is that priority should be given to client and employer before trading from his own account… not the duration (24 hours / 1 hour / 3 days) does not matter. D is very straight
There was a similar question in the schweser textbook. The options were 1 day after the analyst disseminated the information, another option was 1 week after the analyst disseminated the information. The correct answer was the latter.
D is clearly the correct answer. The client was given enough time to act.
I agree D, the analyst has allowed an appropriate amount of time for clients to react. If the clients take his advice, the transactions should occur within minutes/hours so then he can act on the information and NOT violate the standards.
As A and D are oppossites it has to be one of them. Eliminate B and C and have 50% chance withiut knowing anything about ethics at all.