Watson communicated the tender offer information to her supervisor which is not a violation of any standards because shares of the target firm, New Medical, are held in some of BIA's client's portfolios and in the firm's proprietary account thus trading in New Medical should be put on a restricted list. The information provided by Watson involved a proposed tender offer for New Medical’s outstanding shares and, therefore, was material, nonpublic information. Information is “material” if its disclosure would have an impact on the stock value or if a reasonable investor would want to know the information prior to making an investment decision. Material is “nonpublic” until it has been generally disseminated to the marketplace and investors have had an opportunity to react to the information. Neither Jackson, nor Watson should take any investment action regarding New Medical and it should be added to Brunswick’s restricted list to prevent a violation. Since Watson serves on the board of New Medical she has a duty to the firm but the communication of the tender offer (for New Medical) by Watson to Jackson is not a violation of Standard III(A) Loyalty, Prudence, and Care because neither New Medical nor the offering firm, Remedy, are clients of BIA the firm Watson works for. Standard III(E) – Preservation of Confidentiality does not appear to have been violated by Watson’s actions. She does not appear to communicate any confidential information provided by clients, prospects, or her employer concerning the scope of any client-member, prospect-member or employer-member relationship |
