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Craig Boone, CFA, a fixed-income trader, observes that one of the salesmen on the desk has been allocating his trades at the end of the day, giving better execution to large clients, a practice Boone suspects is illegal. The salesman tells Boone this is a common practice and that the firm’s senior management is aware of it. If Boone makes a personal record of the activity, takes it home for his personal files, and subsequently reveals it to regulatory authorities, he would:

A not be in violation of any Standards.

According to Standard IV(A) Loyalty, the interests of a member or candidates employer are secondary to protecting the interests of clients and the integrity of capital markets. In this circumstance, whistleblowing is justified. As long as his motivation is clearly not for personal gain, he may, according to the Standards, violate employer confidentiality in this case. While he is required to dissociate from the suspect activity by Standard 1(A) Knowledge of the Law, he is not prohibited by the Standards from reporting it unless a stricter local law applies.


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