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

A research analyst firm registered under the SEBI (Research Analysts) Regulations, 2014 has been recommending a stock to clients while its associate is a merchant banker that managed the company's recent public issue. Which statement is most consistent with the regulations?

The firm must disclose in the report that its associate managed or co-managed a public offering of the subject company within the prescribed look-back period. Completion of the issue does not remove the obligation, because the disclosure helps readers evaluate potential bias in the recommendation.

  1. ADisclosure of the association is unnecessary because the issue is completed
  2. BThe firm must disclose, in the report, that the associate managed or co-managed a public offering of the subject company in the specified past periodCorrect
  3. CThe firm must withdraw its registration
  4. DThe firm is permitted to recommend only if the issue was oversubscribed

Explanation

Disclosure is required of whether the research analyst or its associates managed or co-managed a public offering of the subject company, or received compensation for investment banking services, in the prescribed preceding period. Completion of the issue does not remove this duty, and registration withdrawal or oversubscription tests are not relevant.

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