ethics surprise

I just learned that according to the Research Objectivity Standards, firms must prohibit “covered employees and members of their famil” to trade contrary to the firm’s most recent, published recommendations or ratings except in cases of extreme financial hardship. So if your firm has a buy or hold rating you can’t sell that stock even if you need the cash to buy a house. Seems ridiculous, but watch out for it.

well it depends…if you are homeless…and really need a house…then that would count as extreme financial hardship I think :)!

I thought that only applied if you wrote the recommendation

touche. let’s modify that to say, not to buy a house if currently renting an apartment.

pop, page 147 of the curriculum says either the employees’ or firm’s rec or rating

page 16 0f 19 ROS. CFA When research analysts are permitted to invest and trade in the securities of the companies they cover, it is critical that firms prohibit them from trading contrary to the published recommendations of the firm on these companies. When research analysts trade contrary to their own investment recommendations, investing clients and prospective investing clients are rightly concerned about the quality and independence of the recommendation. Although there may be legitimate investment-management objectives for selling a security that the analyst recommends that investing clients purchase (e.g., the need to re-balancing a diversified portfolio), investors are sent a mixed message that may cause concern and confusion. There is one instance in which research analysts may be permitted to sell contrary to their recommendation. This is the case where the analyst would suffer “extreme financial hardship” if he or she could not liquidate these securities. To be clear and consistent about how this exception is applied, firms should have clear definitions of what constitutes extreme financial hardship and should also require a significant change in the employee’s personal financial circumstances. Advance approval by the compliance or legal departments should be required. Appropriate documentation of the hardship conditions and the decision process should be retained.

i probably missed the first question thanks

i probably missed the first sentence thanks