Brikland Strickowski learned a month ago that one of his clients, Stratmann, had been regularly using inside information provided by numerous "contacts" in various firms to generate his trading activity with Brikland. Brikland was surprised at Stratmann's recklessness but did not want to get him into trouble so he did not inform anyone about this. AIMR has been tipped about Stratmann's activity and one of the investigators from AIMR's Professional Conduct Program (PCP) recently got in touch with Brikland about this. Brikland, in his desire not to have his CFA designation voided by AIMR, decided to divulge everything he knew about
Stratmann's investment activity, though this information is considered confidential even by AIMR. Which of the following is/are true about this sordid mess?
I. Brikland violated Standard IV (B.5) - Preservation of Confidentiality -by revealing confidential information about Strattman to the PCP investigator.
II. Strattman violated Standard V (A) - Prohibition Against Use of Non-Public Information.
III. Brikland violated Standard I - Fundamental Responsibilities - by not informing his supervisor and/or the SEC about the insider trading.
IV. Brikland violated Standard I - Fundamental Responsibilities - by not dissociating himself from Strattman's portfolio.
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A. B. C. D.C
As an AIMR member, Brikland must cooperate fully with any investigation carried out by the PCP. Since the information revealed during the investigation is kept in strict confidentiality, such a cooperation is not considered a violation of Standard IV (B.5) - Preservation of Confidentiality. Indeed, the Code of Ethics expressly requires members to cooperate with such investigations, failing which the member can be summarily suspended. Note that the Code does not require members to report criminal activity to proper authorities, though doing so is most often prudent and a suggested course of action (Standard I - Fundamental Responsibilities).
However, if the member knowingly participates in illegal activities or does not dissociate himself from such activities, he would be violating the code.