“Members should expect their firms to: Establish a policy regarding reasonable and adequate basis for research reports, with supervisory analyst or or review committee approval required prior to release.” Even though it seems that the firm doesn’t require this approval prior to release I think that this suggests that the correct answer is to delay the report
nyccfa2010 Wrote: ------------------------------------------------------- > It was material information and it was not his > fault that he over heard it. Will it change is > opinion, yes of course it will. Can he use it, of > course not. Issue a report that you know is wrong > and is going to screw alot of your clients over, > go right on ahead, but not expect to last long in > the industry. That makes a lot of sense to you > guys Im sure 
You’re right, unethical for mkts, bad for clients and your rep. Lines are blurred when it comes to this sh!t, that’s why I’m surprised that you could say the answer was simple
keep reading- review committee, etc, they recommend all being on the same day so you get it to market fast. i’m sticking to my ethical guns.
Kwekoolio Wrote: ------------------------------------------------------- > “Members should expect their firms to: > > Establish a policy regarding reasonable and > adequate basis for research reports, with > supervisory analyst or or review committee > approval required prior to release.” > > Even though it seems that the firm doesn’t require > this approval prior to release I think that this > suggests that the correct answer is to delay the > report Your the only one that seems to get it… Its the analyst not the supervisor who wrote the report. It is the analyst name on the report, and his reputation and ass on the line not the supervisors. If there is a conflict ever, the report should be delay until the supervisor or board approves any conflicts of interest that may exist.
bannisja Wrote: ------------------------------------------------------- > keep reading- review committee, etc, they > recommend all being on the same day so you get it > to market fast. i’m sticking to my ethical guns. I’m bullish on bannisja
it said the analyst wrote the original report, it was sound in research, etc. he submits it. this one was his reasonable basis report. he goes and overhears something, switches up his report, his boss knows the 2nd report is junk and has no reasonable basis. what should you do? hold up the legit report? no. i’m done with the argument on this one. i feel good about my answer.
TheAliMan Wrote: ------------------------------------------------------- > nyccfa2010 Wrote: > -------------------------------------------------- > ----- > > It was material information and it was not his > > fault that he over heard it. Will it change is > > opinion, yes of course it will. Can he use it, > of > > course not. Issue a report that you know is > wrong > > and is going to screw alot of your clients > over, > > go right on ahead, but not expect to last long > in > > the industry. That makes a lot of sense to you > > guys Im sure > > You’re right, unethical for mkts, bad for clients > and your rep. Lines are blurred when it comes to > this sh!t, that’s why I’m surprised that you could > say the answer was simple The reason I said it was simple, is because I work in the industry and this happens often. You dont become a Star analyst by issuing reports that you know are going to screw your clients over. And if the CFA says you should issue the report, well then ban me from the CFA because my first duty is to my clients and their interest
I stay with delayed on this one. I can’t see why an analyst changed his opinion and wrote another report, and just because his supervisor doesn’t approve it and then compromise to issue the first report. CFA ethics code is about not giving to be an ethical person while facing pressure from clients or your firm.
bannisja Wrote: ------------------------------------------------------- > it said the analyst wrote the original report, it > was sound in research, etc. he submits it. this > one was his reasonable basis report. he goes and > overhears something, switches up his report, his > boss knows the 2nd report is junk and has no > reasonable basis. what should you do? hold up > the legit report? no. i’m done with the argument > on this one. i feel good about my answer. LOL okay, I am sure you will have a successful career as an analyst knowingly issuing a report that you know will screw your clients over
nyccfa2010, this isn’t about real life, this is about the exam. Half the crap in CFA is useless, as you’ve pointed out/alluded to
kevincwang Wrote: ------------------------------------------------------- > I stay with delayed on this one. > > I can’t see why an analyst changed his opinion and > wrote another report, and just because his > supervisor doesn’t approve it and then compromise > to issue the first report. > > CFA ethics code is about not giving to be an > ethical person while facing pressure from clients > or your firm. the analyst wrote the original report which was solid and thoroughly grounded in fact he then came across some material nonpublic information, and changed the report, justifying his recommendation with bullsh*t so as to not reveal that it’s based on material nonpublic information the supervisor didn’t like the new report because he knew it was bs. the issue is: what must they do now? i say release the original report. the other two choices would be acting on material nonpublic info. major edits because i probably revealed too much about the question
I put delayed as well. They must be in a quiet period. He cant release a report on a company in the middle of his firm finishing a transaction for that company. No i-bank would ever let that happen. The company would go on the restricted list weeks before. They can release the report the next week, his thesis should hold if it is concluded under reasonable basis. If not, and it was based on the non-material info, all the more reason not to release.
what about if your policy was to use extreme discretion with non-material info AND something or other about go to compliance dept. was that a sound policy or is there something wrong with this?
I just can’t say once you changed your opinion, just because your boss disagree, you would just change back, that’s not analyst’s behavior Meanwhile, I show respect to other’s comments
Guys- it is not about saving your clients or employer- it is about the ethical behavior. If you want to act to benefit clients and employer-- go pim…***- no ethics required there. I am not going to put my ass on fire or with SEC with non public information made available to my clients when i KNOW it is inside info and I should not act on it. The right choice is to send out original report ASAP. someone said i do this everyday- with clients— the loyalty should be to clients and employer but at what cost- you want to ruin your career by acting on inside info - go right ahead!!
I put delayed. Thought that reasonable basis would win over timeliness. I don’t think there was any violation w/r/t the duty to employer.
but did his change have reasonable basis? i didn’t think so
Well, I’m voting this as the most controversial question. I think both sides have legitimate arguments. I think if you’re going with delay the fact that you could lose money for clients has jack squat to do with this question. Remember, this is an ethics question and whether or not something is profitable is irrelevant. Anyway, I still think if they were looking for delay it should be based on the fact that the firm should have entered a quiet period or put the co on a restricted list because they were doing IB work with the firm. Otherwise, everything else in the question points to the fact that there was no reasonable basis or support for the new report and absent the material non-public info the old report was still solid. As I write, I think I remember a point somewhere about “inaction” being considered “action” when it comes to material non-public…Could this be it? Hoping for throwout.
I remember that the boss said the analyst’s original report was thorough, solid… What was the conclusion in the morning between the boss and the analyst on whether the report is ready to be released? When to release? Who has the final word on whether release or delay, the analyst or boss? Have both of them overheard the material info? Is there any indication on when that material info (from IB dept) be public?
Its delay. If he knows a merger is going to result in a change in the stock movement to the upside, there is no way he HAS to release a report saying “sell” as if he never heard it