Ethic

An analyst has found an investment with what appears to be a great return-to-risk ratio. The analyst double-checks the data for accuracy, keeps careful records, and is careful to not make any misrepresentations as he simultaneously sends an e-mail to all his clients with a “buy” recommendation. According to Standard V(A), Diligence and Reasonable Basis, the analyst has: A) violated the Standard if he does not verify whether the investment is appropriate for all the clients. B) fulfilled all obligations. C) violated the Standard by communicating the recommendation via e-mail. D) violated the Standard if he does not file a report with the SEC.

B

A

Why A? Wouldn’t that fall under suitability provision of SOPH.

oh i didnt see that part. ill change to B.

A. He has to email only clients which can be interested in this risk-return profile

strangedays, I had the same reasoning but the answer is B. Your answer: A was incorrect. The correct answer was B) fulfilled all obligations. If the analyst had been an investment manager, it would have been inappropriate for him to make a blanket recommendation for all of his clients without considering the unique needs of each. However, the analyst is merely stating that given the qualities of the investment, it is an attractive buy. He has kept adequate records, and made fair disclosure of his rating decision.

JayJeon Wrote: ------------------------------------------------------- > strangedays, I had the same reasoning but the > answer is B. > > Your answer: A was incorrect. The correct answer > was B) fulfilled all obligations. > > If the analyst had been an investment manager, it > would have been inappropriate for him to make a > blanket recommendation for all of his clients > without considering the unique needs of each. > However, the analyst is merely stating that given > the qualities of the investment, it is an > attractive buy. He has kept adequate records, and > made fair disclosure of his rating decision. Thanks for the explanation Jay!

thanks, this one got me, too.