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Ethics...Kaplan Exam book 2 test 2 pm #64

On #64 why would this be a violation if the manager sold the shares after a “substantial rise” in the share price. I understand the violation in issuing the report based on non-public information but on this question and the answer key it seems like they are saying its a violation to sell shortly after a buy recommendation regardless of the price.
Based on this it is a violation if you issue a buy recommendation at $20 but if it goes to $40 3 days after your report you cannot sell? This does not seem correct. At $20 its a buy at $40 it could be a short.
again the question is not asking referring to the original violation (non public info) the way I read it…..any thoughts on this?

In the question all it says is a “substantial rise”….why could he not believe it was a good buy on the day he placed the buy recommendation and then after a huge rise feel it was a sell? The example I gave is saying that something can be a complete bargain one day at a certain price but after a substantial rise it may be in the best interest of the clients to sell…regardless of how optimistic the outlook was 3 days ago the price today may not provide a reasonable return…It does not say anything about using incorrect facts or other questionable reasoning in the original recommendation just that a short time after there was a substantial rise…the market could have took the price way over the original price target. I do not think they provided enough info to warrant this being a clear attempt at manipulation
Only positive here is this question won’t be on the actual exam since it’s here…thanks for the response Andrew…please advise if you feel my argument does not make sense…and disregard the shorting of the stock (was just saying it could now be overvalued and best interest to sell)

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Read the paragraph about him receiving bad news (insider info about restructuring) about company and still releasing report.

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