Material information

CFA Level II Ethics
#1

Garvey work as waitress in a restaurant. She hears two employees of a major brokerage house discussing Metrona, a nanotechnology company. The two employees says that they will issue a report with buy rating on Metrona in two days. Next morning, Garvey buys 40 shares of Metrona for her own account.

Is Garvey violate Standard IIA Material Nonpublic Information?

#2

yes

#3

Why?

And what if Garvey buys only 1 share?

#4

doesn’t matter how many shares, as long as he acts on it or cause others to act on it, it’s a violation.

#5

Ah yes, I thought that trading 40 shares is not material, but the criteria “Material” is based on the information and not on the action on the trading.

Thanks.