- CFA Exams
- CFA Level I Exam
- Topic 10. Ethical and Professional Standards
- Learning Module 71. Guidance for Standards I-VII
- Subject 5. Standard II (A) Material Nonpublic Information
CFA Practice Question
An investment banking department of a brokerage firm often receives material nonpublic information that could have considerable value if used in advising the firm's brokerage clients. In order to conform to the Code and Standards, which of the following is the best policy for the brokerage firm?
A. monitor the exchange of information between the investment banking department and the brokerage operation
B. establish physical and informational barriers within the firm to prevent the exchange of information between the investment banking and brokerage operations
C. prohibit purchase recommendations when the investment banking department has access to material nonpublic information but, in view of the fiduciary obligations to clients, allow sale of current holdings
User Contributed Comments 4
| User | Comment |
|---|---|
| showmethemoney | chinese wall |
| soukhov | deadly traps |
| kingirm | Physical? Really? |
| JNW1980 | I think the CFAI and many others are in denial here. "Chinese Walls" are nothing compared to the power of incentives... I bet I know what Charlie Munger would say about this..... |