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Answer: Monitor employee trading activities by maintaining watch lists.
According to Standard II(A) - Material Nonpublic Information, the use of watch lists is a fundamental component of compliance procedures. These lists help monitor employee trading activities to prevent misuse of material nonpublic information. Prohibiting all proprietary trading (Option B) is not practical, especially for market makers, as it could harm market liquidity. Similarly, unrestricted interdepartmental communication (Option C) is discouraged to minimize the risk of information leaks. Instead, firms should control such communications through designated clearance areas.
Author: LeetQuiz Editorial Team
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According to the recommended procedures for compliance with Standard II(A) - Material Nonpublic Information, firms should:
A
Monitor employee trading activities by maintaining watch lists.
B
Impose a blanket ban on all proprietary trading activities upon acquiring material nonpublic information.
C
Allow unrestricted sharing of nonpublic information between corporate finance and equity research departments.
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