If Analysts changes rating on a stock from Hold to Buy, is it violation if he updates his clients of high portfolios first than those with low portfolio? Is it possible to have investment firm to have different rankings of clients and agreement says to disseminate information to higher ranking clients first and then to lower ranking clients? Does it violate fair dealing with clients?
Discriminating against clients based on the size of their portoflios is a definite violation of the standards. However, when a recommendation is changed only the clients for which the investment is suitable should be notified, regardless of portfolio size. Think suiability and simulatenous dissemination rather than portfolio size.
So it’s more of update clients whose portfolios are affected by the rating change?
yes, that’s how I understand it. Clients whose portolios are affected + the ones who might be potentially interested (depending on their investment objectives).
Thanks for replies. Briefing.com service provides different levels of services. The premium service provides financial news to premium customers ahead of those of basic service. Is it possible to have similar type of service from Goldman Sachs? Rich clients pays higher brokerage fees and are entitled to get new rating on stock ahead of other clients who take basic service. If the customer agreement explains delayed dissemination of information on stock upgrades to basic service customers, does it violate CFA rule? Thanks for your insights.