12.An investment banking department of a brokerage firm often receives material nonpublic information that could have considerable value if used in advising the firms brokerage clients. In order to conform to the Code and Standards, which of the following is the best policy for the brokerage firm?

a.Permanently prohibit both purchase and sell recommendations of the stocks of clients of the investment banking department.

b.Prohibit purchase recommendations when the investment banking department has access to material nonpublic information but, in view of the fiduciary obligations to clients, allow sale of current holdings.

c.Establish physical and informational barriers within the firm to prevent the exchange of information between the investment banking and brokerage operations.

d.Monitor the exchange of information between the investment banking department and the brokerage operation.

13.Jane Doe, a CFA candidate, is a junior research analyst with Howard & Sons, a brokerage and investment banking firm. Howard's mergers and acquisitions department, which handles mergers and acquisitions, has represented Britland Company in all its acquisitions for the past 20 years. Two of Howard's senior officers are directors of various Britland subsidiaries. Doe has been asked to write a research report on Britland. Based on CFA Institute Standards of Professional Conduct, what is Doe's best course of action?

a.Doe may write the report if she discloses Howard & Sonss special relationship with Britland in the report.

b.Doe may write the report but must refrain from expressing any opinions because of the special relationships between the two companies.

c.Doe should not write the report because the two Howard & Sons officers are "constructive insiders."

d.Doe may write the report provided the officers agree not to alter it.