Ethical and Professional Standards Q63

63Siri Shekar, CFA, manages a balanced fund at Starlight Investments. She realizes that the fund‟s holdings in the stock of GYI Company are excessive, and selling the stock will not be easy since it is thinly traded. Shekar is also a regular participant in various social media sites as well as internet chat rooms where she mentions that GYI is going into the expansion. The company has not yet announced any expansion plans. Shekar believes that this will build interest in the stock and she will be able to get rid of some of her stock‟s overweight position. Shekar least likely violated the CFA Institute Standards of Professional Conduct related to:

Option : B
Explanation : A is incorrect because Shekar was trying to artificially boost the price of the GYI’s stock in order to sell her holdings. C is incorrect because there is no basis for her statements in social media sites. Refer to Standard II(A) Material Nonpublic Information, Standard II(B) Market Manipulation, and Standard V(A) Diligence and Reasonable Basis.

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