Can a Research Analyst be in Investment Approval committe? Plz help me


I am currently working in a merchant bank as a research analyst. Final approval of buying/selling a stock follows three steps in this company -

1st Stage: Buy/Sell recommendation from research dept to portfolio mgt dept, 2nd Stage: Suitablity analysis done by portfolio mgt dept and present to investment approval committee, 3rd Stage: FInal approval for buy/sell or not to buy/sell by the approval committee.

As a research analyst I work in the 1st stage. But my company wants me to include in the investment approval committee (3rd Stage) in addition to the current responsibilities.

I think this will be breach of CFA code of ethics working in two stages simultaneously but just couldn’t get to the right reference of the code.

Guys advise me whether I am right or wrong. Also mention the direct reference to the code.\\\\\\\\



Don’t see anything wrong with this…this is just your firm’s decision making process which doesn’t appear to be a conflict of interest…you are just picking stocks and then they want you to sit on the approval committee

We provide buy side research.

Here are my points in favor of my opinion:

  • Being the head of research dept (simultaneously research analyst), I have already approved/given my opinion in favor of my buy/sell recommendation report. So inclusion of me in investment approval committee to take buy/sell decision is redundant.
  • The basic reason for which there always should be strong firewall between portfolio management department and the research department also applies here with equal emphasize. As being in the investment approval committee I can also see which shares will be bought or sold and by which quantity which will be definitely a breach of code of ethics.
  • There may be 4/5 analyst under me. If I do not agree with the buy/sell recommendation of any particular stock may be I will approve it because I can’t force any research analyst to change her recommendation (to protect the independence and objectivity) but being in the investment approval committee I have chance to go to the contrary and thus there may be a potential of conflict of interest.

There are some other points. But I think these three reasons should be enough in favor of my opinion. So guys please rethink your opinion.