A question from Ellan guide test that I got very confused with the answer about… Nicholas an investment manager at Capital Investments Inc, tells Joanna, an analyst at Quality Investments. Ltd, that his friend, James, who works at Alpha Corporation has told him that the company is going throught a difficult time and that next year’s profits may decline significantly. Nicholas thinks that this will adversely affect Alpha Corp share price and there, issues a sell recomendation for the stock. Joanna conducts her own independent, unbiased research and comes out with a sell recomendation as well. Which of the following is most accurate? A. Nicholas, James, Joanna have violated Standard II(A):Material, Non-pulic info. B. Nicholas & James have violated Standard II(A): Material non-public info. C. Nicholas has violated Standard III(E) Preservation of Confidentiality. will tell the answer in sometime.
Answer is B
Why wouldn’t it be A? They all knew about the inside info
I agree with B
Because it states that Joanna derived her sell opinion from her own unbiased, independent research report. Just because she heard this from someone doesnt make this a violation since it states her opinion was based off unbiased research. I believe that is the reasoning…I could be wrong
There was one Elan question that revolved around 3 parties like this and just by hearing it and acting on the information was considered inappropriate. Who knows…
I picked A, because, if Joanna is in possesion of potentially material non-public information, that she cannot act in way that will impact the stock price. but Elan says correct answer is B.
I think it’s funny because in today’s world, if Joanna actually did hear it, didn’t say anything, did research afterwards and issued a ‘sell’, she would get fried by the SEC