You Hear from a Client of Good Standing That a Major

question 125

Multiple Choice

You hear from a client of good standing that a major market participant has taken major losses on its proprietary trading book and is desperate for liquidity. You are not convinced that the story is true, but have a friend at another bank who you know has very large exposures to this firm and would be seriously damaged by a default. What advice does the Model Code give?

• A) Unsubstantiated information which you suspect to be inaccurate and which could be damaging to a third party should not be passed on in any circumstances.
• B) Unsubstantiated information which you suspect to be inaccurate and which could be damaging to a third party should be discussed only with great care.
• C) Unsubstantiated information which you suspect to be inaccurate and which could be damaging to a third party should be reported to the regulator in order to provide warning of possible systemic problems.
• D) You have a duty to warn counterparties but should make clear that the information is unsubstantiated.

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Definitions:

Alcohol Detoxification

The process of removing toxic substances, specifically ethanol, from the body, often under medical supervision, to manage withdrawal symptoms from alcohol dependency.

Rationalization

A defense mechanism where controversial behaviors or feelings are justified and explained in a seemingly rational or logical manner to avoid the true explanation.

Ongoing Treatment

A continuous process of medical or therapeutic care provided to manage or improve a particular health condition.

Last Drink

Refers to the most recent occasion on which an individual consumed an alcoholic beverage, often inquired about in contexts related to alcohol abuse treatment or legal issues around impaired driving.