Allen Young, CFA, owns a 3% shareholder position in Valenti Graphics. Allen purchased a large number of Valenti call options in an attempt to increase the share price. Allen also started a false rumor online that Unitel is considering buying out Valenti Graphics. Allen is most likely in violation of CFA Institute Standard: By spreading the rumor By purchasing the options Both by purchasing the options and by spreading the rumor

The correct answer is the one answered by @PassedTense :)

The two primary market manipulations are transaction-based and information-based. There is nothing illegal about purchasing a large number of call options, so there is no violation there. By spreading false information, Allen is guilty of information-based manipulation.

Question Of The Week - Ethical And Professional Standards (4) - CFA Level 1

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This topic has 3 replies, 3 voices, and was last updated May-187:38 am by AdaptPrep.

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- policedog
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  - Undecided
  21 May 2018 at 7:03 pm
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  The correct answer is the one answered by @PassedTense 🙂
- AdaptPrep
  Participant
  - Undecided
  23 May 2018 at 7:38 am
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  5
  ::
  The two primary market manipulations are transaction-based
  and information-based. There is nothing illegal about purchasing a large number
  of call options, so there is no violation there. By spreading false
  information, Allen is guilty of information-based
  manipulation.
- keerthana
  Participant
  - CFA Level 1
  21 May 2018 at 3:22 pm
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  4
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  which one is the correct answer?
  what does blue bar mean?
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