C is correct because clients should be treated fairly and impartially [Standard III(B)]. In addition, the flexible trading terms allow the hedge fund manager to enrich themselves and is a violation of Standard II(A), concerning trading on material nonpublic information. This is also a conflict of interest [Standard VI(A)–Disclosure of Conflicts]. 

A is incorrect because violations of several Standards have occurred.

 B is incorrect because a violation of the Fair Dealing standard has occurred.

A is correct. Rodrigo has likely violated Standard  I(D)–Misconduct by behaving in an unprofessional manner that reflects adversely on his professional integrity by reporting Torres to the regulator when there is no apparent evidence Torres is using material nonpublic information. Torres is a well-respected analyst known for his in-depth, thorough analysis using a mosaic process. It appears Rodrigo only reported Torres to harm his reputation in order to recapture the market share he has lost over the last two years. There is no evidence Torres manipulated the market through his research. The research is used for the benefit of the Pegasus clients. Although the public may consider Torres’ reports to be material because of the fact that their release can move the market, it does not mean the report must be made available to the public prior to the release of the report to Pegasus clients. 

B is incorrect because there is no evidence Torres manipulated the market through his research. The research is used for the benefit of the Pegasus clients. 

 C is incorrect because while the public may consider Torres reports to be material due to the fact that their release can move the market, it does not mean the report must be made available to the public prior to the release of the report to Pegasus clients.