Reading 1: Code of Ethics and Standards of Professional Co

Michael, industry, class, investment, his

Q1. Michael Malone, CFA, is an investment analyst for a large brokerage firm in New York who covers the airlines industry. After hours in his personal time, Malone maintains an online blog on which he expresses his personal opinions about various investment opportunities, including, but not limited to, the airlines industry. On his blog, he posts a very negative investment opinion about WestAir stock. Malone knows that WestAir's stock will be downgraded to a “sell” by his firm next week. Malone has:

A) violated Standard IV(A) Loyalty by divulging confidential information that is the intellectual property of his employer.

B) violated Standard II(A) Material Nonpublic Information by releasing material that could negatively impact the price of the security.

C) violated Standard VI(B) Priority of Transactions by releasing material information to the public before releasing to the firm’s clients.

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发表于 2009-1-5 15:28 | 只看该作者

答案和详解如下：

A) violated Standard IV(A) Loyalty by divulging confidential information that is the intellectual property of his employer.

B) violated Standard II(A) Material Nonpublic Information by releasing material that could negatively impact the price of the security.

C) violated Standard VI(B) Priority of Transactions by releasing material information to the public before releasing to the firm’s clients.

Correct answer is B)

Malone is in violation of Standard II(A) because the information is both material and nonpublic. He is in violation whether or not he divulges the impending downgrade by his firm on his blog, because he is using nonpublic information. A “sell” opinion on a security issued by a large brokerage firm will almost certainly impact the stock’s price.