- Jim James, CFA, supervises several financial analysts at his firm. James’ compensation is tied to the commissions of the brokers in the firm. James tells Sally Jones, an analyst, to use a report prepared by a rival firm as the basis for her report. He tells her that she will need to make minor changes and that she can then put her name on the report before sending it to clients. The report contains a “Buy” recommendation on a stock in which James’ supervisor owns a large stake. If Jones complies with James’ request: A. she has violated Standard I© Misrepresentation, but James has not. B. both she and James have violated Standard I© Misrepresentation. C. neither she nor James has violated Standard I© Misrepresentation. D. James has violated Standard I© Misrepresentation, but Jones has not. I got it wrong but its obvious why when i looked back
i guess the answer is B. what is the answer
A? She violates Misrepresentation. He violated also, but not Misrepresentation.
A… he didn’t violate misrepresentation
Don’t like this question as much Fred Dean, CFA, has just taken a job as trader for LPC, a large insurance company. One of his first duties in his new position is to execute the purchase ofa block of East Street Industries, a firm that is a major client of his previous employer. During his prior employment, Dean was informed directly by East Street’s CEO that the company’s sales have experienced a sudden drop and are20% below current analyst estimates. This information has not yet been announced. In reviewing the research report supporting the purchase decision, Dean realizes that the buy decision is based on sales forecasts that he knows are wrong. Which of the following actions would be the most appropriate for Dean to take according to CFA Institute Standards of Professional Conduct? A. Anonymously post the information about the drop in sales on an Internet bulletin board to achieve public dissemination of the inforination and inform his supervisor of the posting. B. Contact the CEO and urge him to make the information public and make the trade if he refuses. C. Share the information only with his immediate supervisor and the firm’s compliance officer. D. Request that the firm place East Street’s stock on a restricted list and refuse to make any buy or sell trades of the company’s stock. Answer is B… wouldn’t he be then acting on material nonpublic information
Nevermind I get it haha
i dont…how is b the right answer?
Because if he refuses to do the transaction he would be using the material nonpublic information… Remember that the information is telling him not to make the purchase
Why not D? It isn’t his duty to inform CEO to make public announcement right? it is part of the duty of analyst. or requirement of the standard of conduct? sfagan, appreciate if you could enlighten me.
the answer is A
It isn’t his duty to make the CEO announce the information… But he was already going to act and sell the stock. If he does not buy the stock he would be acting on material non public information… So he wants the ceo to announce the information so that he doesn’t have to buy it.