QUESTIONS 1 THROUGH 18 RELATE TO ETHICAL AND PROFESSIONAL STANDARDS.

12. Wojciech Zdunkiewicz, an equity analyst conducts extensive research into Satyam Computers and is convinced that the stock is a strong buy. He is due to release the research the next day, certain of the accuracy of his advice. Whilst enjoying a celebratory dinner at his favorite restaurant he notices a rival analyst sitting at a nearby table. He drops his fork and crawls around on the floor so that he can get closer to his table to hear what is being said. The rival analyst is boasting to his friend that only he has called Satyam Computers correctly, that the company is in real trouble and will most likely be in liquidation before the end of the year. Wojciech runs back to the office and changes his note to a sell. Has he breached the code of standards? a. Yes, because the information is non-public and price sensitive and his actions amount to insider trading b. Yes, because he has misappropriated non-public information c. Yes, because he does not have a sound basis for his new opinion

©2012

Konvexity All Rights Reserved

Page 4