Which of the following CFA Institute Standards of Professional Conduct is Cummings least likely to have violated?
Q.1 Answer the following:
a. PNB Bank publishes Investment Monthly magazine, which highlights a specific stock in each issue. Publication of the magazine invariably causes the highlighted stocks to rise significantly in value. Rachel Cummings, CFA, manager of PNB's marketing department, often trades in the securities mentioned in the Investment Monthly articles before publication of the magazine. Cummings has access to the recommendations before the magazine's publication because the magazine was created in her department and edited by her. PNB's Code of Ethics restricts trading by all the bank's analysts and
(only one possible answer)
Priority of Transactions
Diligence and Reasonable Basis
Material Nonpublic Information
None is correct
b) Jimmy Connor, CFA, was a technology analyst at Pacific Securities, Inc., and a leading authority on Japanese technology companies. Connor's clients included many Japanese equity managers. While still employed at Pacific, Connor made plans in his free time to start a new company, JC Consulting. These consisted of contracting office space, interviewing potential employees, and purchasing office equipment. Once he felt ready to launch his new company, Connor resigned from Pacific. After leaving, Connor constructed earnings models of the technology companies he previously covered, using the knowledge and experience gained while at Pacific. He then contacted former clients using public sources and encouraged them to become clients of his new company. Are Connor's actions in compliance with the Codes and Standards?
(only one possible answer)
Yes, provided he is not in breach of any non-competition agreement signed while at Pacific Securities.
No, because he is prohibited from engaging in activities related to starting his new business while still employed by Pacific Securities.
No, because the names of former clients, modeling skills, and experience gained by Connor are confidential to Pacific Securities.
None of the above
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