Ethics - Research Objectivity

If a company is performing an activity which is contrary to the Research Objectivity standard recommendations. Would it be considered a violation? There are some aspects in the recommendation section which conform with the requirements, and would be difficult to distinguish the two apart.

I’ll give an example to give some clarity to my question. If a company does not implement a quiet period (which is a recommendation), an analyst would be permitted to trade 30 days from issuance of an IPO (which would be a violation if a quiet period was implemented). If the clients are not disadvantaged by the trade, is the analyst in compliance with the ROS standards?

I couldn’t specifically answer your question, but there’s a good snippet in CFAI text that might clear this up. (page 210 last paragraph, and a little bit of page 211) It explains the relationship in ROS and the standards and how ROS complements the standards.

I looked into it and thank you for the response. Ethics takes on a very subjective view into many aspects, compared to the other subjects.

Definitely, and I find a lot of the time its a matter of being able to just pick out key words from the answer based on how precisely the question was worded.

Oh also, note that in your example quiet period =/= restricted period.

What do you mean by =/=?

Does not equal

Okay. I was referring to quiet period initially, I picked it up from the book. And it was a crucial doubt. Do you know the difference between the two?

Yup! Quiet periods are pretty much just a timeslot where analysts cant issue reports on a certain company, typically around IPO’s and secondary offerings. The merit seems to be that the firm wants to ensure that the analyst wouldn’t have the ability to issue material nonpublic info within their report, in the case that they actually had some.

Restricted periods apply to the actual trading of securities. A firm could want to apply one of these before issuing a research report that can change investor views of a security. Having it makes sure employees cant trade in front of clients (front-running)

Gotcha! Thanks

No prob!