A researcher uses a client's confidential information to execute trades for their own account. Which Standard is violated?

• A. Standard II.A Material Nonpublic Information
• B. Standard I.B Independence and Objectivity
• C. Standard VI.B Priority of Transactions
• D. Standard V.C Record Retention

Answer: (A)

The key idea is protecting confidential information and not using it for personal gain. When a researcher uses a client’s confidential information to make trades for their own account, they’re taking advantage of material information that isn’t public, which undermines the client’s interests and breaches fiduciary duties. This is precisely what Standard II.A Material Nonpublic Information prohibits: handling information that could influence investment decisions in a way that benefits the practitioner rather than the client.

The other standards don’t fit this situation as directly. Independence and Objectivity focuses on avoiding conflicts in analysis and recommendations, Priority of Transactions concerns the order of client trades over personal trades, and Record Retention deals with keeping proper records. None of these address the fundamental misuse of confidential, material information for personal trading.