Steve Wynn, CFA, is an investment advisor and Jennifer Carey has been a client of his for three years. Carey has shown an interest in international stocks, so they agree to consider putting a portion of Carey’s portfolio in foreign stocks. Wynn makes sure that Carey is aware of the currency and political risks inherent in foreign investing before proceeding. They jointly agree to purchase a small portfolio of stocks in the country of Bellagio because one of the brokerage houses that Wynn uses has a great deal of fundamental research on companies domiciled there. Six months later it is revealed in the news media that Bellagio has had severe insider trading problems which have contributed to the loss on the portfolio. Wynn has: A) violated the Standards by not informing Carey about the insider trading risks, but not by contributing to the problem of insider trading. B) violated the Standards by not informing Carey about the insider trading risks and contributing to the problem of insider trading. C) violated the Standards by contributing to the problem of insider trading, but not by failing to inform Carey about the insider trading risks. D) not violated the Standards.
D What was the point of that??
the point is that the correct answer it supposedly A … WTF??? Are we supposed to assume was she aware og the problem??? and if she was then shouldn’t it be B bc she would inherently be contributing to it?? I mis-posted in general instead of level II
Who’s Jennifer Carey? I get the Steve Wynn/Bellagio joke, but where does Carey fit in?
If “insider trading risk” is interpreted as a general risk of investing in a foreign country, for example because some countries have poor regulations, then answer A would make sense. Wynn is not expected to know in advance that Bellagio has this particular problem, but he could have advised the client that international markets have such risks.