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Adam Schute, CFA, is on a conference call with the CFO of an investment banking client with his phone speaker on and his door open. As a result, salesmen and traders overhear the CFO describing problems with production target dates that have not been publicly disclosed. The salesmen relay this information to clients and the traders reduce their positions in the stock. With respect to the Standard on material nonpublic information, Schute has:

A violated the Standard because he should have taken steps to prevent the dissemination of the information.

Schute has violated the Standard by not taking steps to ensure that the nonpublic information he has received as part of his investment banking work was not shared with others in the firm.

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