- Mr B, filed for personal bankcruptcy after incurring large medical expenses, was hired as a portfolio manager. Must Mr B disclose his bankruptcy to his new employer? A. No B. Yes, because bankruptcy represents a potential conflitct of interest. 2. Mr C, a research analyst, visits a company. During the visit, a major piece of equipment fails and Mr C overhears an untidentified employee states that production will be stalled for months. Mr C files a sell recommendation on the company without any additional research. Has he violated any CFA Institute Standards? A. Yes, with respect to material nonpublic information. B. Yes, with respect to diligence and reasonalbe basis. C. No. My opinion: 1 A, 2 B. 1. According to P33 of the handbook, “Personal bankruptcy may not reflect on the integrity or trustworthiness of the person declaring bankruptcy…” Moreover, I remember one question on Practice exams, a manager does not disclose his bankruptcy to clients and he does not violate the Standards. I cannot remember the details… 2. Some one thinks that for Q 2, C is the correct choice. Do a major piece of equipment fails and hearsay mean enough reasonalbe basis? Thanks for comments!
but you’re correct, right? 1 a 2 b: he failed to do a research
Actually I don’t know the correct answers. 1.B and 2. C are recommended.
1st one should be B. even if this poor guy had personal pb, if he is in financial distress he might try to find a way to make money quickly … that is why he should disclose 2nd imagine u r visiting a nuclear power plant. All of a sudden, BOOM !! something goes wrong in front of u with the nuclear core as it appears that they had bad health and safety policies would u care about the guy next to u or the code of ethics anymore ? answer C
D’Artagnan Wrote: ------------------------------------------------------- > > would u care about the guy next to u or the code > of ethics anymore ? > answer C don’t get me wrong. I just mean that u don’t need to do extensive research on the to understand the situation and the random guy’s is just a distractor…
B and B - The key phrase I saw was “without any additional research”
- B - This has been covered on AF in the past week 2) B - As SConnery noted “Mr C files a sell recommendation on the company without any additional research”.
- A Bankruptcy should NOT be an issue to either the employers or the clients. 2) B gotta do your homework, it’s as simple as that.
- A - medical bills do not constitute a valid reason of disclosing the bankruptcy to your employer - there was no wrongdoing 2) B - key words ‘without any additional research’
wow u guys need to get back to reality … the factory exploded right in front of u but u need to make “additional research” on company’s beta, internal reporting issues, conflict of interest between the board members as well as the cleanliness of the toilet (700p report) stating that the company might have pb in futur period
But then… why is the second q, C? is it because its first, he just overheard a comment that’s not material at all, and obviously not public… and came up with his own conclusion on the impact of a machine malfunction, furthermore it’s not an executive comment, just a few factory workers, hence not A. Then a machine malfunction is obviously going to impact the production and henceforth, profit for the year so no additional research’s necessary? The key word is “Major”. A major piece would no undoubtedly major impact on the company? hence not… B. Personally i still think he should do a bit research into the malfunction. maybe it could be fixed within an hour with on site technicians? Without the last bit of doubt I said, it’s likely… that its C… Just going with the flow really… ‘think’ like a CFA candidate, not so much real world logic and doubts…? It’s a simple question that does not require the reality-analytical mind of a real world analyst? Afterall its a question thats’ suppose to be answered in 1.5min, not one that takes days to figure out the actual impact of the breakdown…