market manipulation

CFA Level III Ethics
#1

Question Set from CFAI Website Ethics - Tang Q6

question ask:

are least likely to have violated the CFA Institute Standards of Professional Conduct

answer:

The hedge fund had priority in trading the stock ahead of employees. The hedge fund is effectively the client. But it does not alleviate the stock price manipulation that was engaged in by the fund and its employees, a violation of Standard II(B): Market Manipulation

so why should still choose this?

#2

I’m not following your question. That was the action that least likely violated the standards. Everything the hedge fund did in the paragraph was bad news, except for the fact that selling fund shares ahead of the employees didn’t disadvantage the investors in the fund.