Ethics 4

A CFA Institute member makes a recommendation of a stock in which his firm has a material ownership. He does not know of the material ownership at the time of the recommendation. A day later, he learns of the material ownership and immediately sends out an addendum informing clients of that fact. With respect to Standard VI(A), Disclosure of Conflicts, and Standard V(A), Diligence and Reasonable Basis, this is: A) a violation of Standard VI(A), only. B) a violation of both Standards. C) not a violation of either Standard.

B) a violation of both Standards.

B is the correct answer. I thought this is simple mistake from the analyst’s side.