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CFA Level I · CFA Level I Exam · Guidance for Standard VI: Conflicts of Interest

A firm's marketing division asks an analyst to publish a buy recommendation on a company in order to win investment banking business from that company. This situation is best described as a:

It is a cross-departmental conflict of interest. Members and candidates must resolve it or disclose it under Standard VI(A). Lack of share ownership does not remove it, because the request to support winning business threatens the analyst's objectivity.

  1. Across-departmental conflict that must be resolved or disclosedCorrect
  2. Broutine business practice that requires no action by the analyst
  3. Cpermissible arrangement if the analyst owns no shares in the company

Explanation

The guidance identifies a marketing division asking an analyst to recommend a stock to obtain business from the company as a cross-departmental conflict. Members must resolve such conflicts or disclose them under Standard VI(A). Not owning shares does not eliminate the conflict, since the pressure itself threatens objectivity.

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