CFA Practice Question

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CFA Practice Question

Oscar is a research analyst covering the mining industry. Along with other analysts, Oscar visits the primary mine of Gold Rush Mines (GR). During the visit, a major piece of equipment fails and Lewis overhears an unidentified employee state that production will be stalled for six months. Oscar immediately files a "sell" recommendation on GR without any additional research. Has Oscar violated any CFA Institute Standards?

A. Yes, with respect to Diligence and Reasonable Basis.
B. Yes, with respect to Material Nonpublic Information.
C. No
Correct Answer: A

Oscar must investigate the reliability of the information before making an investment recommendation based on the information.

User Contributed Comments 4

User Comment
Salim6 Why not B ?
SalimBouch it is not true information, it cannot be material
stevo Surely this is material non-public information and lack of diligence
xefor It is unknown without further information if this would be material non-public information. If the employee's claims are false and misrepresenting the situation then it would not be material. However what someone said is not a reasonable or adequate basis and thus a contravention of the Standard V(A).
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