QUESTIONS 1 THROUGH 18 RELATE TO ETHICAL AND PROFESSIONAL STANDARDS

18. Chan Liu, CFA, is the new research manager at the Pacific MicroCap Fund. Liu observed the following activities after she published a research report on a thinly traded micro cap stock that included a “buy” recommendation: • Pacific traders purchased the stock for Pacific’s proprietary account and then purchased the same stock for all client accounts; and • Pacific marketing department employees disseminated positive, but false, information about this stock in widely read Internet forums. Liu notes the stock’s price increased more than 50% within a period of two days and was then sold for Pacific’s account. Which of the following steps is most appropriate for Liu to take to avoid violating the CFA Institute Code of Ethics and Standards of Professional Conduct? A. Report the observed activities to her employer. B. Remove her name from the micro cap stock research report. C. Publicly refute the false information posted on Internet forums.