Genius: “Your answer: D was incorrect. The correct answer was B) Standard II(A): Material Nonpublic Information. Standard II(A) Material Nonpublic Information is least likely to apply to both Harrison and Myers in this situation. Given Harrison’s role on the boards of directors for Internet and Wavelength, he is in the position to potentially receive material nonpublic information; however, there are no facts presented that would infer that he either received or used material nonpublic information about Internet or Wavelength. Myers, as a benefits consultant for Speedy Chip, also may be in a position to receive to material nonpublic information, but again there are no facts presented that would infer Myers’ receipt or use of material nonpublic information.” Stressed out candidate: …did you really just say that they are both in a position to potentially receive material non-public info, but because you didn’t give a specific example of an occurrence in the 2,000 word vignette, the Standard II(A): Material Nonpublic Information miraculously now LEAST LIKELY applies to them? >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Genius: “Your answer: C was incorrect. The correct answer was B) conform to Standard I© concerning misrepresentation; While Hartsburg used Houston’s ideas in his report, he did not quote or paraphrase Houston. That is not a violation of the plagiarism standard. Houston’s statement was innocently overheard in a public place, and as such is not material nonpublic information.” Stressed out candidate: Seriously? This guy overhears another analyst who covers his industry during dinner, realizes that the overheard ideas are important enough to change his already written report, doesn’t reference the source, passes the ideas off as his own, and it is not a violation of misrepresentation because he heard it innocently in a public place? Wow, that is an interesting defense to a plagiarism charge. Umm, mr. competitor, yeah you need to just chill out. I mean, its cool, I overheard you talking about it at Denny’s and since it was crowded and everyone else that was snooping heard I figured I could just put it in there. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Genius: "In order to conform to the Code and Standards with relation to Northern Lights stock, Hartsburg should: A) sell the shares before issuing the report. B) not disclose his holdings if company policy calls for a generic disclaimer about analyst stock ownership. C) transfer the Northern Lights shares to his stepdaughter’s account before publishing the report. D) ask the company to assign another analyst to cover the stock in an effort to avoid the conflict of interest. Your answer: D was incorrect. The correct answer was B) not disclose his holdings if company policy calls for a generic disclaimer about analyst stock ownership. If the brokerage uses language related to the analysts’ potential stock ownership, that should satisfy the requirements of Standard VI(A): Disclosure of Conflicts. All of the other answers are incorrect. Requiring the selling of shares or requesting another analyst is overkill, as analysts are not prohibited from owning stocks they cover. Stressed out candidate: Dude. Just stop this nonsense. 90% of this topic is exactly about overkill. Don’t worry about disclosing that you personally own 1,000,000 shares of that small cap stock. Oh now you want Mike to write the report? Don’t be such a wussbag, we have this generic disclaimer that will take care of it. Yeah that sounds just like something the CFAI would be cool with, a generic disclosure that “should satisfy the requirements of Standard VI(A)”, sorry my bad. Ethics is hard enough. You start throwing this garbage in there three, four times every 12 questions and how the hell are you supposed to crack a comfortable score in ethics in qbank or on a practice test?
Having to infer the vignette from the answer. Wouldn’t diligence and reasonable basis be a problem for the 2nd one (I know it may not even be a choice). The 3rd one sounds like BS.
I noticed that there were also some winners like these in the practice tests in vol. 1. However, I believe that these kinds of examples are most important for us to put on our thinking caps and at least get a gauge for how things could be delivered to us in the real exam.
Here you were, here you still are.
The Shwesers generic disclosure: is it enough for covered stock ownnership?
There is the only ever apearance of Generic and Disclosure in the CFAI:
MD&A should not consist of generic or boilerplate disclosure
(Institute 128)
Institute, CFA. 2015 CFA Level II Volume 2 Financial Reporting and Analysis. Wiley Global Finance, 2014-07-14. VitalBook file.
The citation provided is a guideline. Please check each citation for accuracy before use.