CFA Practice Question

CFA Practice Question

Kurt Fassbinder works for a publishing firm that publishes FW, a magazine for the finance industry. FW's is widely respected and its stock recommendations have positive price impact. Fassbinder informs his friend Arun Kumar about the recommendations prior to FW's publication. Using this information Kumar trades stocks on his personal account and generates considerable profits.
A. Only Fassbinder has violated Standard II (A) Material Nonpublic Information.
B. Fassbinder and Kumar have both violated Standard II (A) Material Nonpublic Information.
C. Only Kumar has violated Standard II (A) Material Nonpublic Information.
Explanation: Standard II (A) Material Nonpublic Information is violated by both the person who knowingly provides the material non-public information and the person who acts on it.

User Contributed Comments 3

User Comment
chandsingh I dont get it, i thought there are many questions where the persons who leak the info but dont act on it are not in violation? Do they mean fassbinder should have known better
emonik Since Fassbinder informed Kumar about the recommendations prior to FW's publication, he also violated standard 11 - A.
Albireo I got several questions that said the person informing "as long as he is not acting on it" does not violate. I don't get it. Really.
You need to log in first to add your comment.