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CFA Level I · CFA Level I Exam · Guidance for Standard II: Integrity of Capital Markets

A company's chief financial officer briefs a room of twelve selected analysts and gives them material earnings guidance that has not been released to investors in general. One analyst attending the briefing is most likely to be in compliance with Standard II(A) if she:

She complies by refraining from acting on the guidance until it reaches investors in general. Information given to a select group of analysts stays nonpublic, and a disclosure to a room full of analysts does not by itself make it public under Standard II(A).

  1. Arefrains from acting on the guidance until it is made available to investors generallyCorrect
  2. Brecommends the stock to clients because the disclosure was made to a room full of analysts
  3. Cacts on the guidance because the company chose to disclose it voluntarily

Explanation

Information made available to analysts remains nonpublic until it is made available to investors in general. A disclosure to a room full of analysts does not necessarily make the information public. Voluntary company disclosure to a select group does not change this, so options B and C would breach the standard.

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