hard · CFA Level I ethics
A portfolio manager at Westfork Bancorp, Leo Thorne, is considering a significant investment in Pinion Logistics. He discovers on an anonymous social media forum a post from a user claiming to be a Pinion employee, alleging that the company’s internal shipping volumes are 15% higher than reported. Thorne also observes unusual weekend activity at Pinion's main terminal while driving by. He synthesizes this with a public report from Solstice Utilities showing a spike in industrial electricity demand in Pinion's region. Thorne immediately purchases shares for his clients. If Thorne had instead received a leaked, unannounced quarterly earnings draft from a Pinion executive, his purchase would be:
- A violation of Standard II(A) regardless of his other research.
- Permissible if he documented the mosaic before receiving the draft.
- Permissible if the earnings draft merely confirmed his existing mosaic.
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