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

A research analyst wants to publish a research report on a listed company in which the analyst's relative holds shares. Under the SEBI research analyst framework, which action is required?

The analyst must disclose, in the research report, the financial interest held by the analyst and relatives in the subject company. Disclosure lets readers judge the conflict of interest. Prior SEBI approval or forced sale of shares is not required.

  1. ANo disclosure is needed because the holding is with a relative and not the analyst
  2. BDisclose the financial interest of the analyst and relatives in the subject company in the research reportCorrect
  3. CSeek SEBI's prior approval before publishing the report
  4. DPublish the report only after selling the relative's shares

Explanation

The regulations require disclosure of the financial interest (including that of associates and relatives) in the subject company, so that readers can judge possible conflicts. Prior SEBI approval is not required, and there is no mandatory divestment. Not disclosing would be a breach.

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