medium · CFA Level I ethics
Priya, a research analyst at Westfork Bancorp, is investigating Amberfen Pharma's upcoming drug, Ambenax. She collects the following: (1) public Phase II results from the FDA website; (2) a nonmaterial, nonpublic observation from a primary care physician about slowing prescription refills; (3) a private tip from a lab technician that Phase III results, scheduled for next week, show a total failure; and (4) public patent expiration data for Amberfen’s existing portfolio. Priya compiles facts 1, 2, and 4 into a 'Mosaic Research File' and issues a 'Sell' recommendation. She then calls a high-net-worth client and mentions the lab technician's tip. If Priya had also personally sold her Amberfen shares after hearing the lab tech’s tip but before publishing her report, her primary violation would be:
- Standard VI(B) Priority of Transactions only.
- Standard II(A) Material Nonpublic Information.
- Standard I(C) Misrepresentation.
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