Explanation:
A. Incorrect because if the staff under discussion for possible termination are in low-level positions, the information is unlikely to be considered material.
B. Incorrect because the absence of specific names being mentioned does not necessarily make the information non-material when disclosed to clients prior to any public dissemination.
C. Correct because in order to comply with the Code and Standards, a member or candidate cannot use material nonpublic information when making investment recommendations. The information overheard would be considered material only if any public announcement of the staff removal would be likely to move the share price of the bank.
In this case, the discussed changes are unlikely to affect investor perception of the bank, so Msafari could use the information when making an investment recommendation.
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While waiting in the business class lounge before boarding an airplane, Becca Msafari, CFA, an equity analyst, overhears a conversation by a group of senior managers, including members of the Board, from a large publicly listed bank. The managers discuss staff changes necessary to accommodate their regional expansion plans. Msafari hears several staff names mentioned. Under what circumstances could Msafari most likely use this information when making an investment recommendation to her clients?
A
Under no circumstances
B
If she does not breach the confidentiality of names of staff
C
If the discussed changes are unlikely to affect investor perception of the bank
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