The Wall Street Journal publishes an article in the morning concerning a rating restatement on company X. Analyst Parrot immediately issues a sell recommendation. Is she in violation of due diligence on her downgrade? (I have an answer)
I would say no. then go apesh*t. (sorry. that will be the last time. but it was funny.)
i would say yes, Parrot should do their own research
I would say yes as well. No diligence.
I would say yes.
I would go with yes also.
if the analyst knows that the restatement is going to affect the security adversely, i would think this is ok… unless the wsj was speculating about a restatement. i say so because i ran into another ethics question where a pm sells a security based on a weather report. that may be different though. i must be wrong.
Maybe looking into it too deep but if Wall Street Journal is publishing the info then the market has probably already taken that news into account. If the price is already really low, issuing a blanket sell wouldn’t be good. Would want their own research to make that determination. My thought process. Not sure if it’s correct or not.
The answer is indeed you apesh!t. Very good CFASF1. Also the answer is that is not in violation of due deligence. The information published in the Wall Street Journal was public information. While Henderson did not do any independent research, the Journal is a credible source, and even the hint of an accounting scandal can be enough to sink a stock. As such, using the story to justify a downgrade did not violate Standard V(A) or Standard V(B).
damn.
thepinkman Wrote: ------------------------------------------------------- > The answer is indeed you apesh!t. Very good > CFASF1. > > Also the answer is that is not in violation of due > deligence. > > The information published in the Wall Street > Journal was public information. While Henderson > did not do any independent research, the Journal > is a credible source, and even the hint of an > accounting scandal can be enough to sink a stock. > As such, using the story to justify a downgrade > did not violate Standard V(A) or Standard V(B). You didn’t say anything about an accounting scandal in the question. It simply said “restatement”. Since when did a restatement equate to a scandal?
I suppose I should have included that the restatements were due to off-balance sheet accouting practices. Don’t blame me blame Chad.
dude
not cool
Ethics seem to be a coin flip to me.
so now there is a LIST of “credible sources” - for which an analyst can bypass doing his/her own research!?? is anyone selling this list? i’d give my peach syrup covered calculator to buy it! this is crap…I think the Times of India is a credible source…does that count?? idiots
sure,credible sources indeed. ask those who believed in the credibility of AAA rated toxic CDOs
Dsylexic Wrote: ------------------------------------------------------- > sure,credible sources indeed. ask those who > believed in the credibility of AAA rated toxic > CDOs Yeah sorry about that.