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

A marketing division asks a buy-side analyst at a bank to recommend the stock of a company in order to win business from that company. Which response is most consistent with Standard VI(A)?

The analyst should resolve the potential conflict or disclose it so that independence and objectivity are not impaired. Marketing pressure to recommend a stock to win business is a cross-departmental conflict, and Standard VI(A) requires avoidance or full disclosure rather than simply complying with the internal request.

  1. AIssue the recommendation, since the request came from within the firm
  2. BDecline all research coverage of the company in the future
  3. CResolve the potential conflict or disclose it, so independence and objectivity are not impairedCorrect

Explanation

The guidance on cross-departmental conflicts says pressure from a marketing division to recommend a stock to obtain business creates a potential conflict. Members must resolve such situations or disclose them. Issuing the recommendation simply because the firm asks ignores independence and objectivity, and permanently declining coverage is not required.

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