Trading afterhours and material nonpublic info

CFA Level I Ethics
#1

Can anyone help with the question below. The answer is C and I haven’t been able to wrap my head around how allowing trading after the close constitutes a violation of material nonpublic info. Are there any concrete examples that might clarify this? Thanks.

"Charlie Mancini, CFA, is the Managing Director for Business Development at SV Financial (SVF), a large US-based mutual fund organization. Mancini has been under pressure recently to increase revenues. In order to secure business from a large hedge fund manager based in Asia, Mancini recently approved flexible terms for the fund’s client agreement. To allow for time zone differences, the agreement permits the hedge fund to trade in all of SVF’s mutual funds six hours after the close of US markets, which is prohibited by US regulators. Did Mancini violate any CFA Institute Standards of Professional Conduct?

  1. No.
  2. Yes, with regard to Fair Dealing.
  3. Yes, with regard to Fair Dealing and Material Nonpublic Information.
    "
#2

U.S. companies tend to release a lot of information after markets close. Allowing a select client to trade after U.S. market close is giving them the opportunity to act on information that affects the value of the investment. Whether that information is nonpublic by then may be debatable, but it certainly is often material.

I believe the underlying point is that by allowing trades to take place after market close, Mancini may “cause others to act” on material information that may not be as widely known as “public information” generally is.

#3

Makes sense! Thank you so much!