Question #33
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: 19
Status: Incorrect
Correct Answer: A
Your Answer: C
Question
Lynne Jennings is a chemical industry research analyst for a large brokerage company. That industry is currently seeing an increase in mergers and acquisitions. While flying through Chicago, Jennings sees several senior officers who she knows are from the largest and fourth largest chemical companies walk into a conference room. She concludes that negotiations for an acquisition might be taking place. Jennings:
Answer Choices:
A. may use this information to support an investment recommendation
B. should inform her compliance officer that she has material nonpublic information on firms she covers
C. may not act or cause others to act on this information
Explanation
The fact that the company officers met is not material nonpublic information. As long as
she bases her investment recommendation on her own independent research, Jennings
will not violate any Standards if she uses this additional information to support it.
(Module 42.3, LOS 42: II(A))