‘’…Robinson knew Carlyle from his previous days in the research department. Based only on Carlyle’s recommendation, Robinson reviews the accounts under his management and purchases Paladin stock where suitable.’’
Question #2 : By purchasing Paladin stock for his client accounts, did Robinson most likely comply with the CFA Institute Standards of Professional Conduct?
So the question asks if a portfolio manager complies with the Standards if he buys a stock for his clients based solely on the firm’s research department opinion. The answer is ‘’NO, because he based his purchase on Carlyle’s analysis’’
How is this answer correct in any way? The curriculum states ‘’ XXX can rely on third-party research that has a reasonable and adequate basis’’.
So does this mean that purchased 3rd party research is ‘’good to go’’ BUT ‘’in-house’’ research should be scrutinized?!