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 and contributing to the problem of insider trading. B) violated the Standards by not informing Carey about the insider trading risks, but not by 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.
I’m going with D
B. See if I can get another one wrong.
D
I know the answer and its BS.
i would think D, but if D was the answer you probably wouldnt have posted this one…
Your answer: D was incorrect. The correct answer was B) violated the Standards by not informing Carey about the insider trading risks, but not by contributing to the problem of insider trading. Wynn should have known about the risks and should have informed Carey of the risks. However, merely investing in a market in which insider trading is prevalent is not a violation of the Standards.
dude T/G
I can’t even be mad at this one. It’s just ridiculous.
oh, i agree. it’s absurd. just wanted to get a consensus.
It is from Level I schweser qbank!!
seriously…are they kidding?
My perception… If that analyst knew about Insider trading risks then he would/should have told her. Say he did knew and didn’t inform the client - Violation - agree. Then the analyst is also contributing to the problem of increased insider trading by encouraging more investments in that country!!.. Anish
anish…where does it say that he knew about insider trading?? it says he knew about currency and political risks…that’s it…
mumukada Wrote: ------------------------------------------------------- > anish…where does it say that he knew about > insider trading?? > > it says he knew about currency and political > risks…that’s it… Oh I meant to say that an analyst wouldn’t advice everybody on the insider trading risks ( thats what we assume when we read ethics question - stick to whatever info is given in the question) !! So if he has violated the standard by not explaining her the risks then I assume that he have had some idea of the same. Just an opinion… Ethics is not what I strongly bet on!! Anish