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While attending his wife’s office party, Donald North, CFA, overhears two top executives from Parker Industries discussing that the company’s Board of Directors just approved to omit its cash dividend due to unexpected losses during the quarter. Parker has paid a quarterly dividend for the past ten years. The next day, North calls his broker and instructs her to sell short Parker’s common stock.
While in a coffee shop, Diane South, CFA, overhears two top executives from Ryland Products say that their company is about to be acquired by another company for a substantial premium over the market price. The next day, South calls her broker and instructs him to buy 500 shares of Ryland’s common stock.
Which of the following statements about whether North and South violated Standard II(A), Material Nonpublic Information, is CORRECT? A. North violated Standard II(A) but South did not violate Standard II(A). B. Neither North nor South violated Standards II(A). C. Both North and South violated Standard II(A). |