A portfolio manager overhears, in an airport, two executives of a public company discussing an unannounced, material merger. The information is material and nonpublic. Under Standard II(A), the manager should:

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Multiple choice — select the best answer

ATrade immediately because she obtained it by chance
BDisclose it only to her best clients
CTrade only a small position to limit impact
DNot trade on or cause others to trade on the information

✓ Correct answer: D. Not trade on or cause others to trade on the information Standard II(A) prohibits acting or causing others to act on material nonpublic information, regardless of how it was obtained. Accidental possession does not permit trading.

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Topic: Ethical & Professional Standards

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A portfolio manager overhears, in an airport, two executives of a public company discussing an unannounced, material merger. The information is material and nonpublic. Under Standard II(A), the manager should:

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