Question #32 - Reading 42.2 Standards of Professional Conduct Guidance for Standards II

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: 18

Status: Unattempted

Correct Answer: B

Shared Context

- If Lance had disclosed material that was nonpublic information about the decline of sales of Mediplex and its effect on IMed's earnings, Cunningham would have been least likely to be obligated to do which of the following? A) Make reasonable efforts to achieve public dissemination of material nonpublic information disclosed in a breach of duty. B) Inform the appropriate regulatory authority that Lance had violated securities laws. C) Not trade in shares of IMed.

Question

Lance is very nervous before the conference call. Norton, IMed's president, has told him that he must not disclose the decline in sales of Mediplex. During the call, Hunt asks Lance whether the rumors of the side effects of Mediplex are true and whether these rumors have negatively impacted sales. Lance assures Hunt that Mediplex sales are strong and that IMed is confident that sales will continue to rise for the remainder of the year. Which of the following best describes Lance's actions when he stated that sales of Mediplex were strong?

Answer Choices:

A. Lance complied with Standard IV(A), Loyalty to Employer

B. Lance violated Standard I(D), Misconduct

C. Lance violated Standard III(B), Fair Dealing

Explanation

Lance violated Standards I(D), Misconduct, when he lied about the sales of Mediplex. Under Standard I(D), members are prohibited from engaging in any professional conduct involving dishonesty, fraud, deceit, or misrepresentation or commit any act that reflects adversely on their dishonesty, trustworthiness, or professional misconduct. Neither Standard IV(A), Loyalty to Employer, which relates to independent practice that could result in compensation or other benefit in competition with their employer and does not relate in this situation nor Standard III(B), Fair Dealing, which relates to dealing fairly and objectively when making recommendations to clients, are relevant or apply to this situation. Lance is also NOT in compliance with Standard I, Professionalism, because he violated Standard I(D), Misconduct.

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