CFA Practice Question

CFA Practice Question

While having dinner with an important client, Gus Brady opens his client's appointment book laying on the chair while the client goes to the wash room. In the book, Brady notices some remarks in the margin that seem to suggest that the next earnings announcement, which is a week away, will be below analysts' expectations. Armed with this information, Gus orders the client's company's stock to be sold from the pension plan portfolios that he manages. Gus
A. has done the right thing as he has acted in the interest of his pension fund clients and discharged his fiduciary duty.
B. should have called his client in the morning and asked him to announce the information sooner than the scheduled date to let the market know of the earnings drop.
C. has violated Standard II (A) - Material Nonpublic Information.
Explanation: By trading on misappropriated information, Gus has violated Standard II A.

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