Reading 2-II: Standards of Professional Conduct & Guidan

executive, received, Network, junior, white

Q15.Marion Klatt, CFA, is a representative for Thiel Financial Network. Klatt received a phone call at home from William Kind, a junior executive at Westtown Development Company, asking whether Klatt had heard that Westtown had just reached an agreement to acquire a major shopping mall chain at a very favorable price. (Klatt had not heard this news, and Klatt was able to confirm that the information had not yet been made public.) Kind requested that Klatt acquire 10,000 shares of Westtown for Kind’s personal account.

Klatt should:

A) not acquire the shares until he has contacted Westtown's management and encouraged them to publicly announce the merger discussion.

B) not acquire the shares.

C) not acquire the shares until the information is made public.

Q16.Regarding non-public information, which one of the following statements is FALSE?

A) An analyst may use some types of non-public information.

B) A member can be summarily suspended for having received material non-public information.

C) Disclosing material non-public information would have an impact on the price of a security or be of interest to a reasonable investor.

Q17.The investment-banking department of the XYZ Brokerage House often has information that would be of significant use to the firm's brokerage clients. In order to conform to CFA Institute Standards of Professional Conduct, which of the following policies should XYZ adopt?

According to Standard:

A) III(B), Fair Dealing, all clients should be informed of the information at the same time.

B) II(A), Material Nonpublic Information, XYZ should encourage their investment banking clients to publicly disseminate this information.

C) II(A), Material Nonpublic Information, XYZ should establish physical and informational barriers within the firm to prevent the exchange of information between the investment banking and the brokerage operations.