Ethical and Professional Standards Q53

53Rhonda Gates, CFA, works as a senior analyst covering basic materials and mining industry at Marcel Investments. After thorough and independent research, Gates concludes that the stock of Riley Mining is overpriced and recommends selling it to take profits. She informs all the department heads of Marcel of her findings. Thomas Toffler, head of trading, after being informed about Riley‟s stock immediately places a sell order on behalf of the firm and is able to trade aggressively. The next day Gates‟ report is sent to all clients and the sales force. Toffler least likely violated which of the following Standards?

Option : C
Explanation : Standard III(A) Loyalty, Prudence and Care has been violated because Toffler did not place his clients’ interests before his employer’s interests. Standard VI(B) Priority of Transactions has been violated. Toffler would have avoided the conflict by waiting until his clients had the opportunity to receive and assimilate Gates’ report. The report was sent out to all clients at the same time; hence Standard III(B) Fair Dealing is not violated.

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