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Answer: Yes, by informing her brother about the material nonpublic information she overheard
**Explanation:** According to Standard II(A) - Material Nonpublic Information, CFA Institute members and candidates must not act or cause others to act on material nonpublic information. Information is considered "material" if its disclosure would likely impact the security's price or if reasonable investors would want to know it before making an investment decision (e.g., upcoming quarterly results from a reliable source like the CEO). Jennings violated this standard by sharing the material nonpublic information with her brother, prompting him to act on it. While the mosaic theory allows analysts to use public and non-material nonpublic information to form recommendations (as in option C), Jennings' actions in option B clearly breach the standard.
Author: LeetQuiz Editorial Team
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Maria Jennings, CFA, overhears the CEO of United Retail disclosing that the upcoming quarterly report will fall short of analysts' expectations. She promptly informs her brother, who owns the stock, about this information. Later, she issues a "buy" recommendation for KTD Retail based on public and non-material nonpublic information. Has Jennings most likely violated the CFA Institute Standards?
A
No
B
Yes, by informing her brother about the material nonpublic information she overheard
C
Yes, by utilizing both public and non-material nonpublic information in her analysis to issue a "buy" recommendation
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