Greg Hoffman, a Levell CFA candidate, works as an independent securities research consultant and is known for unbiased, objective research and recommendations. Hoffman has been hired by managers of Hill Manufacturing, Inc. (HMI) to write a research report on their company. Hoffman performs a thorough analysis ofthe firm’s financials, the industry in which it operates, and the overall market and economy. After conducting his due diligence, Hoffman writes a report on HMI with a strong “Buy” recommendation. Hoffman posts the report for purchase on a Web site he created to support his consulting business but does not state either on the website or in the report that HMI paid for the research. Several of Hoffman’s regular clients purchase the report and subsequently purchase shares in HMI which rapidly increase in price by over 20%. According to CFA Institute Standards of Professional Conduct, Hoffman has: A. violated Standard I(B) Independence and Objectivity, but not Standard VI(A) Disclosure of Conflicts. B. violated Standard VI(A) Disclosure of Conflicts, but not Standard I(B) Independence and Objectivity. C. not violated either Standard I(B) Independence and Objectivity or Standard VI(A) Disclosure of Conflicts. D. violated both Standard I(B) Independence and Objectivity and Standard VI(A) Disclosure of Conflicts. How comes that he is invoved in violation of Standard I(B) Independence and Objectivity??? Is it because of his website or sth else?? anyone has any idea???
is D the answer. Is is also violation of loyalty toward HMI. HMI paid for research and hoffman uses for his own consultancy without getting consent from HMI. ??
D. I think. Analyst must disclose in the firm-paid report the fact of the payment to (potential) clients in order for them to judge if the report is objectiv and independant
Because the people reading the report on HMI need to know that he was hired by HMI to write the report!
you’re all right D is the correct answer okay I miss the fact that he is hired by HMI…