4、Darden Crux, CFA, a portfolio manager at SWIFT Funds, calls a friend to join him for dinner. The friend, a financial analyst at Cyber Kinetics (CK) declines the invitation and explains that she is performing due diligence on Orca Electronics, a company that CK is about to acquire. After the phone call, Crux searches the Internet for any news of the acquisition but finds nothing. Upon verifying that Orca is on SWIFT's approved stock list, Crux purchases Orca's common stock and call options for the SWIFT fund. Two weeks later, CK announces its intention to acquire Orca. The next day, Crux sells all of the Orca securities, giving the fund a profit of $3 million. According to the Standards of Practice Handbook, did Crux violate any CFA Institute Standards of Professional Conduct? A. No. B. Yes, because he traded on material non-public information. C. Yes, because he allowed his friend to pass on insider information. D. Yes, because he should have waited three days instead of two before selling Orca.
Correct answer = B
Standards of Practice Handbook, 9th edition (CFA Institute, 2005), pp. 37-43
Standard II (A)
2008 Modular Level I, Vol. 1, pp. 36-42
Study Session 1-2-a
demonstrate a thorough knowledge of the Code of Ethics and Standards of Professional Conduct by applying the Code and Standards to specific situations presenting multiple issues of questionable professional conduct
The CFA Institute Standard relating to material nonpublic information requires members/candidates who possess material nonpublic information that could affect the value of an investment to not act or cause others to act on the information.
Crux traded on material information: Orca is about to be acquired by Cyber Kinetics.
The information is nonpublic because it is not publicly available, which was verified when Crux researched Orca on the Internet and found nothing about the acquisition. | 
发表于 2008-5-27 11:21
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