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Ethics question from Schweser exam paper

All,
I’ve been attempting some of the past papers and am stuck on this particular ethics questions.
Paul James, CFA, is a retail stock broker for a national financial services corporation. Jame’s client base is mainly comprised of small to mediumsized individal accounts. James notices that one client in particular, Chet, is particularly adept at picking undervalued stocks. James decides to watch Young’s trades and mimic them in his own account.
James:
A. is in violation of Standard VI(B) Priority of Transactions because he is front running the client’s account.
B. is in violation of Standard V(A) Diligence and Reasonable Basis because he doesn’t have a reasonable basis for his trades.
C. is not in violation of any standards.
D. is in violation of Standards I(D) Misconduct because he has misappropriated confidential client information.
I picked D but the answer is C. I would’ve thought that mimicking a client’s trading technique without their consent is a form of dishonesty (or at least permission is required).
Is anyone able to explain why it’s not a violation of Standard I(D)?
Thanks.

I think you got the names mixed up. It mentions Chet once and Young once…. Tough question nonetheless.
I would say D as well but C makes sense since Chet/Young is not an investment professional and that James is making the trades into his personal account and not comprimising the integrity of any of his fee based client accounts.

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It is not an easy question becuase what he is doing doesn’t seem right, but I think confidential information refers to personal information etc. Also he did not disseminate the info to a 3rd party. If you worked for Warren Buffet and followed his trades after he entered them I guess there is no problem there LOL
Look at the other answers too and learn stuff from them.
He is not front running, but they could have said entered the trades just before his client’s and received the same price seeming as if no harm was done, but he is still front running.
He did not have reasonable basis, but he did not trade for his clients. Had he bought for anyone else he would have been guilty of this

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It’s C. He can use the client info as long as he doesn’t hurt the client or give it to people who shouldn’t have it.

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Thanks for the responses guys! I found it to be a bit of a grey area, although it appears to be somewhat shady I guess under the standard no one is getting hurt or being treated unfairly.
Cheers.

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This is very confusng mann….can any senior folks give us a more clear explanation?
Thanks!

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Anyone has different opinions about this question? I went for D too

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