In his office, Garcia can hear Omega’s squawk box over the speakerphone. Garcia enjoys listening as Omega analysts discuss changes in ratings, economic forecasts, and capital market developments. He is careful not to trade in stocks mentioned explicitly on the squawk box. Rather, he sometimes researches competitors and other firms operating in the same industry. In one case, he immediately shorts the stock of Tefla Corporation after an Omega analyst downgrades a firm in the same industry.
Q. When shorting Tefla stock, does Garcia violate any of the CFA Institute Standards?
- No
- Yes, because he does not have a reasonable basis for the trade
- Yes, because he is in possession of material nonpublic information
C is correct. Garcia is in possession of material nonpublic information and acted on it in violation of Standard II(A). After the analyst’s recommendation has been issued and/or distributed publicly, Garcia would be free to make the trade. Because this is a personal purchase, the standard relating to diligence and reasonable basis is not applicable.
老师你好，这里文中特地提出了Garcia不trade on播放出来的stock，反而research竞争对手和同一个产业中的别的公司。
虽然文中有体现出Garcia存在偷听行为，但是光从交易Omega analyst downgrade firm这件事，analyst downgrade a firm不是公开发布下调评级吗？所以已经是一个public information了，请问为什么还算Garcia交易non-pubclic information呢？
