a research analyst covering health care sector has holdings in a health care ETFs. does he have to disclose this on his reports? i guess he should to be safe?

Two ways to deal with conflict of interest. You either disclose it or avoid it. One of the way to avoid conflicts of interest is to invest in Mutual Funds. You don’t have to disclose your holdings in MFs. I would assume that whatever applies to Mfs alos applies to ETFs, so I would say no.

I know some associates covering the bank sector. Right now they are buying hte ETF’s cuz they can’t buy the banks outright. they don’t disclose.


You can short an ETF, its like any other equity - I find it suprisnig you don’t have to disclose an ETF holding!

At work, we have to disclose any transaction in a security that is priced intraday in real time. That includes ETFs. MMs are excluded. Getting back to the question - the analyst might recommend going long a sector through an ETF. That could create a conflict of interest. So I would say yes to disclosure.

Interesting. Certainly if you are making recommendations about a sector, you would have to disclose if you have a sector ETF. If you are making a recommendation about a company, it is probably necessary to disclose if that company is part of the ETF that you hold. If you are making a recommendation about a company and have sector information relevant to an ETF you hold, you probably have to disclose. There may be some legal wiggle room here, but the real damage would come from just the appearance of impropriety. Safer to disclose, I’d think.

I’d disclose. If your a bullish analyst on health care, but are shorting XLV (in theory lets just say), I would, as a reader of your report would like to know. Of course there are diversification reasons for doing that, but we won’t overcomplicate things.