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Ethic Questions...

So Im just going through the Ethics Section (did other sections first), and ran into some questions, So i figured I post my questions in this thread for further clarification.
Ill start with this one, not really a question but it got me thinking about the scenario. I am not sure if I am allowed to directly copy the example from the schweser text so ill just paraphrase
“Mrs X is in an elevator when she overhears the CFO of company X tell the president of Company X that the companies eranings for the past quarter have dropped significantly, information which will not be released till next week. Mrs X immediately calls her broker and tells her to sell her Company X Stock”
Ok so I know this is an obvious violation of Standard II (A) material nonpublic information, but I was thinking how difficult and helpless it must be for someone like Mrs X to overhear such material information. So basically she just sits there and waits till next week when she knows her stocks will plunge? is there anything she can do? I mean its not like her went out of her way to try to get this information or snoop around, she was just in the wrong place at the wrong time…

Absolutely. Sounds a little unfair on its face when you personalize the facts of how one can inadvertently obtain insider information by no fault of their own, but this is absolutely against the law. As a practical matter, the noninvestment professional who just happens to be on the elevator and hears the information has very low odds of getting caught and/or prosecuted but I’m not one to play the odds with my freedom or my conscience for that matter.

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918, the code and standards apply only to CFAI members and candidates, who in this situation could encourage the firm to publicly disseminate the material nonpublic information, but otherwise must notify compliance and cannot take investment actions based on the information.
Now, regarding the client you mentioned, who presumably is not a candidate or member, the code and standards do not apply but the law is applicable. Insider trading is illegal in many places. Go ask Martha Stewart and Mark Cuban about that.
“If a member or candidate determines that information is material, the member
or candidate should make reasonable efforts to achieve public dissemination of
the information. This effort usually entails encouraging the issuer company to
make the information public. If public dissemination is not possible, the
member or candidate must communicate the information only to the designated
supervisory and compliance personnel within the member or candidate’s firm
and must not take investment action on the basis of the information.”
handbook, p.40.

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How exactly is this a clear violation? Who is Mrs. X and what fiduciary responsibility does she have toward the Company?

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And to add to this example, what happens if say Mrs X was not in the investment profession but rather just a client visiting her advisor. So they have to follow these same codes of professional conduct etc? Could she, after overhearing this information, sell all her stock in the company?

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