Q6. Ironclad owns shares in several research and technology companies, including approximately 4 percent of the outstanding shares of Advanced DSL (“Advanced”), Internet Connections (“Internet”), and approximately 6 percent of the outstanding shares of Speedy Chip Technology (“Speedy Chip”) and Wavelength Digital (“Wavelength”).

• Harrison serves on the board of directors for Internet and Wavelength, while Myers provides consulting services for Speedy Chip. Harrison receives cash compensation and stock options for his services, while Myers receives restricted stock and stock options.

• The investment bank that led the public offering of Internet and Speedy Chip and seven of nine sell-side analysts covering the companies have “sell” ratings on the stocks. Ironclad’s analysts have also issued “sell” recommendations on the companies due to, among other issues, lack of earnings transparency and quality of earnings.

• Harrison increases his position in both Internet and Wavelength citing “growth opportunities” and “consensus opinion.”

Which of the following least likely applies to Harrison and Myers?

A)   Standard II(A): Material Nonpublic Information.

B)   Standard IV(B): Additional Compensation Arrangements.

C)   Standard III(A): Loyalty, Prudence, and Care.

答案和详解如下：

Q6. Ironclad owns shares in several research and technology companies, including approximately 4 percent of the outstanding shares of Advanced DSL (“Advanced”), Internet Connections (“Internet”), and approximately 6 percent of the outstanding shares of Speedy Chip Technology (“Speedy Chip”) and Wavelength Digital (“Wavelength”).

• Harrison serves on the board of directors for Internet and Wavelength, while Myers provides consulting services for Speedy Chip. Harrison receives cash compensation and stock options for his services, while Myers receives restricted stock and stock options.

• The investment bank that led the public offering of Internet and Speedy Chip and seven of nine sell-side analysts covering the companies have “sell” ratings on the stocks. Ironclad’s analysts have also issued “sell” recommendations on the companies due to, among other issues, lack of earnings transparency and quality of earnings.

• Harrison increases his position in both Internet and Wavelength citing “growth opportunities” and “consensus opinion.”

Which of the following least likely applies to Harrison and Myers?

A)   Standard II(A): Material Nonpublic Information.

B)   Standard IV(B): Additional Compensation Arrangements.

C)   Standard III(A): Loyalty, Prudence, and Care.

Correct answer is A)

Standard II(A) Material Nonpublic Information is least likely to apply to both Harrison and Myers in this situation. Given Harrison’s role on the boards of directors for Internet and Wavelength, he is in the position to potentially receive material nonpublic information; however, there are no facts presented that would infer that he either received or used material nonpublic information about Internet or Wavelength. Myers, as a benefits consultant for Speedy Chip, also may be in a position to receive to material nonpublic information, but again there are no facts presented that would infer Myers’ receipt or use of material nonpublic information.

thanks