Latham has been following a publicly traded oil firm, Techron Oil. Recently, he read a review about the oil fields in Venezuela, to the effect that the actual oil content of the fields across the country might be as much as 35% higher than previously estimated. Techron owns sizable properties in Venezuela and Latham has concluded that the research report implies that Techron might have as much as a million gallons a day in excess capacity that has not been factored into the stock price. In his report, he properly attributed the original review as the source of his information and recommended that in his opinion, Techron's stock was an immediate BUY. Latham has
I. violated Standard V (A) - Prohibition against Use of Material, Non-Public Information.
II. violated Standard IV (A.2) - Research Reports by failing to distinguishing between fact and opinion.
III. violated Standard IV (A.1) - Reasonable Basis and Representations.
IV. violated Standard II (C) - Prohibition against Plagiarism.
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A. B. C. D.B
Since the review was publicly available, Latham has not violated Standard V (A) - Prohibition against use of Material, Non-Public Information. Also, because he properly attributed his original source, he has not plagiarized according to Standard II (C). However, by not carrying out an independent study to verify that his conclusions were indeed warranted, he violated Standard IV (A.1) - Reasonable Basis and Representations. Note that he has not confused fact with opinion and therefore not violated Standard IV (A.2) - Research Reports.