Ethics question

CFA Level III
#1

Below is a Schweser ethics question … A CFO who is a CFA Institute member is careful to make his press releases—some of them containing material and previously undisclosed information—clear and understandable to his readers. While writing a new release, he often has his current intern proofread rough drafts. He also sends electronic copies to his brother, an English teacher, to get suggestions concerning style and grammar. With respect to Standard II(A), Material Nonpublic Information, the CFO is: A) not in violation of the Standard. B) only in violation by e-mailing the pre-release version to his brother but not the intern, because the intern is in essence an employee of the firm. C) violating the standard by either showing the pre-release version to his intern or sending it to his brother. Cheers :slight_smile:

#2

C

#3

C…

#4

C - done

#5

Why not B?

#6

becuz his brother is part of the public…so i guess its a violation to send it to him even though he woudn’t really have an effect on the stock price…

#7

I’d say it’s “A” b/c the standard prohibits ‘acting’ on material, non-public info and we’re not told that the brother is inclined at all to trade on the info. The intern works for the CFO, so he is considered part of his team. He is okay to review the material.

#8

C, he’s not being careful enough with the information. Non-public info should not be shared with relatives or interns.

#9

C Standard requires keeping unannounced info confidential… and to use limited access persons, an intern should not be an access person since they are likely unfamiliar with the Code & Standards.

#10

slouiscar Wrote: ------------------------------------------------------- > C > > Standard requires keeping unannounced info > confidential… and to use limited access persons, > an intern should not be an access person since > they are likely unfamiliar with the Code & > Standards. Yeah the intern is an idiot, like every other intern. He doesn’t know about getting me my coffee, let alone the standards. Freakin idiot intern.

#11

C

#12

mwvt9 Wrote: ------------------------------------------------------- > slouiscar Wrote: > -------------------------------------------------- > ----- > > C > > > > Standard requires keeping unannounced info > > confidential… and to use limited access > persons, > > an intern should not be an access person since > > they are likely unfamiliar with the Code & > > Standards. > > Yeah the intern is an idiot, like every other > intern. He doesn’t know about getting me my > coffee, let alone the standards. Freakin idiot > intern. He? A male intern? I am not sure how they do it in the iron city, but as far as I know, intern requirements include max age 22, female… and I am going to quit that description there in case my wife or the pc police are reading.

#13

What you are describing isn’t an intern my friend… BTW, you have some mail.

#14

I took it from the perspective that intern is an employee. What’s the answer getsetgo?

#15

The Schweser answer is C