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Basic Question 3 of 15
Beth Patrick, a fixed-income analyst at a brokerage company, assists her company's traders by developing in-house bond ratings to supplement those of the major bond rating services. The traders use disparities in the ratings to construct profitable investment strategies. Patrick makes inferences from nonmaterial private information and news events, which she reflects in her bond ratings. Patrick's approach ______.
B. violates confidentiality rules
C. violates insider trading rules
A. reflects the mosaic theory
B. violates confidentiality rules
C. violates insider trading rules
User Contributed Comments 8
| User | Comment |
|---|---|
| kalps | Host of information is used, some of it nonmaterial but private - this is they key thing to look for in questions i guess |
| rstartsev | I guess the key point here is 'non-material' issue. Whether it is private or not |
| eastbaypete | News event is public event and in using non-material private information= cobbling the information together. In essence, Mosaic. |
| sanyukta | rtstartsev - good point... non material is key word.. |
| ggupta | Yes, Non material information doesn't affect in any way! Right? |
| vatsal92 | No violation if conclusion reached through analysis of Public info. + Non-material non-public info. |
| raffrobb | Inferences from non material private information..Dead give-away! |
| gerdvar | No violation whatsoever since a) the info is non material and b) the statement doesn't mention whether the access to that private info was through misappropriation so, as by the statement, the info was legit to use |
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Andrea Schildbach
Learning Outcome Statements
demonstrate a thorough knowledge of the Code of Ethics and Standards of Professional Conduct by applying the Code and Standards to specific situations;
recommend practices and procedures designed to prevent violations of the Code of Ethics and Standards of Professional Conduct.
CFA® 2025 Level II Curriculum, Volume 6, Module 44.