CFA Practice Question

CFA Practice Question

Morgan Bates maintains an account with an external broker and often trades in stocks that are recommended by his firm's research department. He, however, conducts his own independent analysis and waits between five and ten days after the release of the report before trading.
A. Morgan has violated Standard II (A) - Use of Material Nonpublic Information.
B. Morgan has violated Standard VI (A) - Disclosure of Conflicts to Employer.
C. Morgan has not violated any standards.
Explanation: Morgan has not violated any standards since he has given ample time for the research report to reach the firm's clients so they can trade before he does. Unless firm policy prohibits such trades, Morgan has not violated any standard.

User Contributed Comments 4

User Comment
thekapila ISNT B could be answer. He should have disclsed his trades to employer for which his employer makes recommendations.
PRICHARD C is true. He waits long enough to trade the stocks, and he conducts his own research.
copus B is not correct becuase there is no conflict with the employer. By using the research and using a relatively long black out period before trading, no material conflicts arise.
scprior if the employer has safe-guards that require trading activity disclosure, than yes he violated for not disclosing, but THIS question doesnt state a policy, so assume there isnt one. can only go by facts given, except if its a bond problem, we assume semiannual if not stated :) fun times
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