Standard II- Integrity of the Capital Markets

CFA Level I Ethics
#1

Dear all,

I wish to clarify the following sub pointer under Standard II- Integrity of the Capital Markets regarding non-public material information.

It has been mentioned in the CFAI Curriulum that, I quote:

Issues of selective disclosure often arise when a corporate insider provides material information to analysts in a briefing or conference call before that information is released to the public.

Question: When analysts formulate opinions on the companines, they cannot formulate their views based on these “corporate insider” info? They have to formulate opinions on the “assumptions” that they did not have any prior knowledge of the company? Won’t there be an element of biasedness in the analyst’s report thereafter?

Thank you.

Cheers,

Ernest

#2

Ernest, are you serious with these questions?

#3

Someone please? Thank you!

#4

here i thought singapore/hongkong was the financial hub of asia that sought financial transparency and market integrity.

i think there’s two sides to @ernest’s question.

i. he believs in strong EMH. so the exclusion of corporate inside-info would disadvantage normal analysts.

ii. he’s trolling.

my advice is : don’t overanalyze the standard. it’s just basically saying we’re living in the 21st century with financial transparency. so don’t be the one caught trading/recommending based on inside info. the cfai ethics questions will never be asking you about the impact of such ethical questions. it’s either you’re in violation of the standards or not. in other words, evaluating the impact of ethical/nonethical choices are not part of the curriculum.

#5

Thanks for the reply. I’m just confused with the quoted statement taken from the CFAI curriculum.

So even if analysts are invited for a close-door conference, s/he must not formulate opinions thereafter using these non-public material information as this will be violating the starndard, right?

Personally, I hold the view that most markets are semi-strong form efficient.

Thank you.

#6

please tell me it’s the language barrier. what you just proposed is trading/recommending on material information.

speaking for profits, it’s highly advisable. ethically by cfai standards and legally by pretty much any jurisdiction however, you’ll face a ton of charges if you make enough dough to raise flags.

read the curriculum many many many many many times @ernest.

if it’s the language barrier, even if you know the material, you’ll have a hard time on the exam.

if you’re the problem, mad respect bro. just hope you never go to jail. (make at least a 10+M usd before going to jail though).

#7

Alright, appreciate the explanation!

Cheers,

Ernest