Market Manipulation and Ethical Standards

Hard Cfa Institute Code And Standards Integrity - Market Manipulation

Julia is an investment advisor who specializes in technology stocks. Recently, she received favorable inside information regarding a potential merger involving a major tech firm. In a team meeting, she advised her colleagues to purchase shares of the company before the announcement, stating confidently that the share price will rise significantly after the news is made public. Julia's actions raise concerns about market integrity.

Based on the CFA Institute's Code of Ethics and Standards of Professional Conduct, particularly regarding market manipulation, which of the following statements is true?

Julia's recommendation is ethical as long as her colleagues are aware that the information is confidential.

Julia's actions constitute market manipulation because she is trading based on nonpublic information.

Julia can proceed with her recommendation if she informs her clients that the information is speculative.

Hint

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