Barnes, Staple and the broker (MNpI)

CFA Level I Ethics
#1

Vol. 1 p. 55 ex. 1

A couple of takes on this one…

  • Barnes is not violating IIa because he is not inducing his sister to trade and she presumably needs to know the info to perform her job properly.
  • Could his sister be in violation of IIa even though her daughter does not trade? Is this still inducing to trade? One could say that the intent is there. Even though it doesn´t really harm the business, something doesn´t feel right about her revealing the MNpI.
  • Are we to assume that Staple is a CFA charterholder? Apparently so. If not, none of this would apply to him, right?
  • Same for the broker.

Thoughts?

M.

#2

Regarding the last two bullet points, I think it is prudent to assume that the standards apply to everyone even if it wasn’t explicitly conveyed that they are/aren’t CFA members/candidates. The question is “would they be in violation if they were bound by the standards?”

As for the second one… I too feel like the sister is in violation here. I guess the implication is that, among family members, you could get away with it. The fact that the sister’s daughter owns stock would indeed raise a red flag for me - despite the fact that her position is positive.