) IN STATEMENT 2, CLEANTECH MOST LIKELY VIOLATED WHICH OF THE FOLLOW...

3.) In Statement 2, CleanTech most likely violated which of the following Standards of

Professional Conduct?

A. Material Nonpublic Information

B. Suitability

C. Misrepresentation

Answer = A

"Guidance for Standards I–VII," CFA Institute

Standard II(A): Material Nonpublic Information; Standard I(C): Misrepresentation

Standard II(A): Material Nonpublic Information has been violated by the board member

who shared material nonpublic information with the hedge fund and by the fund

because it acted on the information. Standard III(C): Suitability does not appear to have

been violated because the fund is characterized as a high-risk investment, and it is

clearly stated that EnergyAlgae is also a high-risk investment. CleanTech's statement

that the hedge fund benefited from the increase in share value for EnergyAlgae last year

is a violation of Standard I (C): Misrepresentation because the fund had only recently

invested in the stock, so it did not benefit from the large move in the stock's price.