Question #4
Reading: Reading 42.2 Standards of Professional Conduct Guidance for Standards II
PDF File: Reading 42.2 Standards of Professional Conduct Guidance for Standards II.pdf
Page: 2
Status: Correct
Correct Answer: B
Question
Chuck Thomas is the trustee of a trust of which Jill Wyatt is the main beneficiary. Wyatt's husband is the president of a company. In emptying the recycling bin at home, Wyatt finds some papers that lead her to believe that her husband's company will make a tender offer to acquire another firm. Wyatt takes the information to Thomas, who uses it to purchase shares of the company for the trust, but does not further disclose the information. Thomas has:
Answer Choices:
A. not violated any Standards
B. violated the Standards concerning material nonpublic information
C. violated the Standards concerning loyalty, prudence, and care. Hunter Harrison, CFA, is president and chief investment officer (CIO) of Ironclad Investments, an investment adviser and pension consultant for medium and large corporate pension clients. Ironclad recently hired a compliance officer to update its compliance manual, which follows the CFA Institute Code and Standards. Harrison serves as a director on several non-profit and corporate boards of directors, some of which have their pension assets managed by Ironclad. Harrison oversees Ironclad's research analysts and portfolio
Explanation
Thomas cannot act or cause others to act on material nonpublic information.
(Module 42.3, LOS 42.b)
Hunter Harrison, CFA, is president and chief investment officer (CIO) of Ironclad
Investments, an investment adviser and pension consultant for medium and large corporate
pension clients. Ironclad recently hired a compliance officer to update its compliance
manual, which follows the CFA Institute Code and Standards. Harrison serves as a director
on several non-profit and corporate boards of directors, some of which have their pension
assets managed by Ironclad. Harrison oversees Ironclad's research analysts and portfolio
managers, including Michelle Myers, who passed Level II of the CFA examination last year
and plans to sign up for next year's Level III exam as soon as registration opens. Myers is a
portfolio manager who regularly meets with clients and prospects. Myers is also a partner in
a software company that sells retirement and benefit administration services to institutional
clients, some of which are also clients of Ironclad. During her correspondence with
prospects and clients, Myers includes reference to her status as a "Level III CFA candidate" in
her biographical background to increase her prominence in the industry.