I take this from another thread to keep it smaller… This is a typical example of unclear question/answer in my opinion: 1) Lautenschlager […] is preparing to issue a somewhat negative report on the company that will include a “sell” recommendation. […] The CEO of the company is highly upset […] Lautenschlager’s BEST course of action is to: a. Publish the report as written, regardless of the objections by company management. b. Publish the report with the analysis intact, but remove the “sell” recommendation. c. Revise her analysis of the company in light of management’s objections to the report. d. Allow company management to make revisions to de-emphasize the negative factors but maintain the “sell” recommendation in the report. So clearly the focus is on “Independence”, not “misrepresenting” etc. But we do not know why the CEO is upset. Would you really publish as written? d.) doesn’t sound good. But a,b, and c *could* be ok. c.: If objections are factual, why not revise the report? Maybe the CEO is right? Maybe he has some reasons to be upset? b.: If omitting the “sell” recommendation, do you misrepresent something, really? In light of getting a lot of trouble, you might try to be a bit more diplomatic, without stating the untruth? a.: If you’re right and the CEO is not, you could stay with your opinion. I guess the best candidates are a and c. What is the proposed answer?
I’m sure A is the CFAI answer. But C seems best. Especially since the CEO is “highly upset”. That probably indicates some kind of material error in facts, or misrepresentation of the company in the report.
I would say a. It is obvious that management of the company will object, but if an analyst listens to them, he would no longer be objective.
> I’m sure A is the CFAI answer. But C seems best. Yep, that’s the necessary “tell the teacher what you think he wants to her”-strategy. 
Anyone know the “official” answer? Is this really from CFAI or from Schweser/Stalla?
> I would say a. > It is obvious that management of the company will > object, but if an analyst listens to them, he > would no longer be objective. Think about it in a real situation. Your CEO thinks you’re an idiot. You would NEVER publish the report as it is. And being diplomatic without stating untruths could save your ass…
Is it the CEO of your company or the company you’re writing about? I interpretted it as the CEO of the company you’re writing about, and as long as there are no factual errors (which I think the question would state, but you never know), just saying what the company you’re writing about wants you to say would clearly be non-independent (who would be happy about a negative report and a sell recommendation on their company???) The question also stated that the report was “somewhat negative.” How much more would you be able to tone it down and still represent the pertinent facts?
“Forumreader”. I agree completelly. I also understood that the CEO the question reffers to is the ceo of the company the report is about.
It is A. This question is captured from the 49 questions posted on the CFAi site.
re-reading it also seems to me to be the CEO of the company the research is written about. does indeed make more sense. find this out in 1.5 minutes :-*
A junior analyst would need to have some brass balls to p!ss off a CEO and lose a client for the research firm. I’m not implying that the analyst should do anything unethical, but lets face it, if the CEO is upset, try to find out where some disagreements lie and see if it is possible to perhaps lighten the blow of weak ratios with some qualitative aspects from intangible assets, workforce, etc.