Kapie

Very close …
26. C is correct. McGarnicle, as an employee, developed the model on behalf of Outer Rim. Therefore, Outer Rim, not McGarnicle, is the owner of the model. Applejack violates Standard IV(A) Duties to Employers: Loyalty when he downloads the model without proper written permission from Outer Rim Financial. Applejack is misappropriating employer assets.
27. C is correct. Applejack is least likely to violate Standard II(A) regarding Material Nonpublic Information when using the model at Smith and Garner. Applejack likely violated Standard IV(A), Loyalty, when he used the model. The Standard prohibits members who leave an employer from taking records or files—such as the model—without the written permission of the employer. Applejack also likely violated Standard I(C) Misrepresentation when he failed to correct his supervisor’s impression that the investment idea and the model were Applejack’s creation.
28. C is correct. Applejack violates Standard II(A) Material Nonpublic Information. He has a reasonable belief that the conversation that he overhears is from a reliable source and would have a material impact on security prices. According to CFA Standards, he must not act, nor cause others to act on the information. Applejack does not violate the Standard relating to Diligence and Reasonable Basis because he bases the recommendation on a reliable model and checks his inputs prior to making the recommendation.
29. A is correct. Applejack least likely violates Standard III(C) which relates to suitability during his phone conversation with McGarnicle. According to the Standard, members in an advisory relationship with a client must determine an investment’s suitability within the context of the client’s portfolio. The Standard also requires that members make reasonable inquiries into a client or prospective client’s investment experience; risk and return objectives; and financial constraints prior to making investment recommendations. McGarnicle is neither a client nor a prospective client, thus Applejack is not bound by the Standard of Suitability during their conversation. Applejack is, however, in jeopardy of violating other Standards—specifically those relating to Integrity of Capital Markets and Preservation of Confidentiality by revealing material nonpublic information about a Rain Man client. According to Standard II(A), Applejack, who is in possession of material nonpublic information, must not act, nor cause others to act on the information. According to Standard III(E), members must keep information about current, former, and prospective clients confidential.
30. A is correct. McGarnicle uses her usual process in researching Softcore Industries. She is not in possession of material nonpublic information and she maintains her objectivity. Her use of the model provides a reasonable basis for the decision not to pursue additional research or make an investment recommendation regarding Softcore Industries.
31. A is correct. Blogs and company websites are in the public domain and thus do not constitute inside information. Applejack’s use of blog sites to supplement his current research process is acceptable.