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“Janet Jackson was recently hired as the new compliance officer of Long Beach Securities. Upon orientation of the firm, she learns that the head of research is also responsible for the junior analysts that work in the corporate finance department. Which Standards would be susceptible to violation given this situation?
A) Standard I-D, Misconduct
B) Standard II-A, Material Nonpublic Information
C) Standard IV-C, Responsibilities of Supervisors
D) Standard I-B, Independence and ObjectivityThe Right Answer is b. You skipped this question.
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Explanation:
Standard II-A, Material Nonpublic Information, discusses the need for “firewalls” in order to keep sensitive information secure. Corporate finance personnel are deemed as “temporary insiders”, with any information they may gain in the course of their duties required to be kept strictly confidential, even from the analytical department of the same firm. For Janet to build an effective “firewall”, there must not be an overlap of personnel or supervisory scope across these two very different departments”Have found this ques on investopedia. why is Option D incorrect?
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From my understanding, even with an overlapping role between these 2 departments (which are NOT supposed to), the analyst could still practice independence and objectivity, unless otherwise stated. The only issue that can’t be avoided especially when you are in charge of 2 conflicting departments.
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