Ethics Q

CFA Level I
#21

This has nothing to do with materiality – it has to do with how widely disseminated the data is. An analyst call is considered restrictive in its scope. As this is explicitly laid out in the CFA texts, I would highly advise just accepting this scenario as fact.

#22

I would even argue that the information in question 1 is material (and non public) as both analysts feel that it would drive price up. I think that’s fairly material.

#23

mcf, I am talking about CFA’s own rules, not my rules. 1.Say you’re the CEO of a company. CFAI says you can’t use a conference call to announce material nonpublic info, correct? Please say “yes”. 2. From (1) above, it follows that material nonpublic information must not be communicated through conference calls, right? Otherwise, why would CFAI ask you not to use conference calls to announce material nonpublic information? 3. If information given in a conference call is NOT material nonpublic information, then why should you keep it a secret? Answer is D by CFAI’s own rules.

#24

You’re over analyzing, which is why so many people tank on ethics. CFA is not saying you cannot disclose material non-public information at an analyst call. What they are saying is that an analyst call might not be a broad enough forum to qualify as disclosure to the full market. If you are the CEO of a company, you can disclose whatever you like at an analyst meeting. The information is yours to disclose. However, as an analyst, if you receive material non-public information from a CEO, you are not allowed to disclose it.

#25
  1. CFAI is making rules for CFAI members and candidates for a designation, not for executives of companies. Not even for investment professionals, if they are not members of CFAI or candidates. 2. Companies are free to communicate whatever at the conference calls, but usually they don’t gossip about who had a DUI this past weekend. They do talk about last quarter results, or annual results, or plans for the next term. 3. Analysts, members of CFAI or candidates, are prohibited from using material information disseminated at press conferences, or gatherings, until it becomes public.
#26

Thanks everyone.

#27

So it’s A&A.