Can it be a violation of suitability to simply update a recommendation from a sell to hold or hold to buy?
Since a rating was already in place, wouldn’t it imply the investment was already suitable.
Thanks.
Don’t think it is a violation
Once you update your research, as long as you disseminate it to all investors the investment is suitable for their account, then you are not in violation.
it depends on what you mean. A recommendation is generally made to an individual investor (be they an individual or institution) and suitability could be an issue. However if you mean your firm’s research report that concludes with a published buy, hold or sell rating, then presumably someone else in your firm would work with individual investors to determine how to apply your general recommendation including considering suitability. Based on what you asked my guess would be you are referring to the latter situation.
Yes the research report; conducting analysis then updating the rating; I assumed an analyst could not violate Suitability even if the firm has an advisory relationship
You make a blanket recommendation and then assess suitability (recommendation has to be rational and has reasonable basis)
I suspect that you’re misunderstanding what suitability means.
as long as your recommendation has a reasonable basis and has no conflicts of interest (must be disclosed), it’s fine.