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NISM Certifications · NISM-Series-XV: Research Analyst · Legal and Regulatory Environment (NISM XV)

A registered individual research analyst publishes a report on a listed company. Which combination of facts would constitute a breach of the SEBI Research Analysts Regulations?

Failing to disclose a relative's holding in the subject company, especially when the relative traded just before the report, breaches the regulations. Holdings of the analyst and associates must be disclosed, so the other options, which disclose or involve no compensation, are compliant.

  1. AThe analyst holds shares of the company, and discloses this in the report
  2. BThe analyst's relative holds shares of the company, and this is disclosed in the report
  3. CThe analyst received no compensation from the company and states this in the report
  4. DThe analyst's relative bought shares of the company a day before the report and the report does not disclose the holdingCorrect

Explanation

Holdings of the analyst and associates (including relatives) in the subject company must be disclosed, and trading around a report raises conflict concerns. The first three options involve proper disclosure and are compliant. Only the last involves nondisclosure of an associate's interest.

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