Reading 2: Conflict of Interest (Dover & Roe)
reading 2, page 152, example 2 about “Dover & Roe” selling their 25% stake in a multinational bank holding, then immediately changing their specific investment recommendation on the stock from “Sell” to “Buy”. Additionally, D&S adds the bank’s CP to its approved list for purchase.
- I assume ‘the new relationship’ relates to the approved list of purchase for CP. Am I right?
- Is there any conflict of interest when D&S sells its bank holding share while issuing a ‘Buy’ recommendation? Why would D&S sell its share while it recommends its clients to “buy” the bank holding stock?
I am thinking there could be strategic (non-financial) for D&S to sell its share.
Any comment from those more familiar with those transactions and topics?
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