Michaels has violated the Standard concerning:

Michaels has violated Standard IV(C) Responsibilities of Supervisors, which requires him to make reasonable efforts to detect and prevent violations of compliance procedures. Simply making employees aware of the rules is not enough. Monitoring of employee trades, duplicate confirms, establishing blackout periods, or preclearance of employee trades are all methods that would have revealed the problem prior to the external audit. Michaels has not violated Standard 1(D) Misconduct because his actions did not exhibit dishonesty or lack of integrity.