CFA Practice Question

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CFA Practice Question

Which one of the following least accurately describes CFA Institute's Standard relating to using material nonpublic information?

A. An analyst using material nonpublic information may be fined by CFA Institute.
B. An analyst may violate this standard by passing information to others even when it has been obtained from outside the company.
C. An analyst may use material nonpublic information if it has been developed from a combination of nonmaterial items of information.
D. An analyst may use material nonpublic information secured from sources which have neither breached their duty nor misappropriated the information.
Correct Answer: A

User Contributed Comments 14

User Comment
Nancie D is not accurate, either. What if the material nonpublic info involves tender offer or is obtained in confidence?
0is4eva It says "least accurate". "Which one of the following is the least accurate...". An analyst being fined by CFA Institute is the least accurate option about MATERIAL NONPUBLIC INFORMATION. I can't find any references to fines by the CFA Institute...?
OzzyPhilly Besides if it involves a tender offer or is obtained in confidence then D would not apply because the sources would have breached their fiduciary duty to keep such information confident and/or to publicize it fairly
dlo1 An example of D would be if another "lead" analyst had arrived at significant conclusions in a report from material public information and a 'mosaic' of information. The conclusions of this report would be material nonpublic information if it was directly communicated from the company. If the analyst subscribed to this report, then there is no breach of duty or misappropriation.
surob I think dlo1 made an excellent point.
MattyBo Agree with 0is4eva. Key to question is "least accurate". No specific references to "fines" in Standard - just process for disciplinary action.
dblueroom ditto dlo1
hyperinflation I guess it was easy for me b/c I read A and knew that it was the right choice. Had I read each possible answer, I would have been really confused.
gill15 Dlo...if it was subscribed to in a newsletter it would no longer be non-public information.

Think D just means if you use this information alongside public information its good to go.
johntan1979 D is a perfect example of mosaic theory... no violation there.
Shaan23 I did another similar type question in cannot trade on material non public material even if it was received with no breach of duty...

I guess you can use the information but you cant trade on it...confusing..
Shaan23 Changed my mind. D is also wrong but it asks for least accurate. D could have exceptions as A can not and is always wrong.
raffrobb Got it on my first try!
shalie I think B is mosaic theory
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