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NISM Certifications · NISM-Series-XV: Research Analyst · Introduction to Research Analyst Profession

A research analyst's report on a listed company is being reviewed. Which practice is most consistent with the requirement to disclose conflicts of interest?

The analyst should disclose in the report itself any financial interest of the analyst or relatives in the subject company and any compensation received from it, irrespective of the rating. Selective, oral or self-assessed disclosure fails the objectivity and transparency purpose of conflict disclosure.

  1. ADisclosing in the report any financial interest of the analyst or relatives in the subject company and any compensation received from itCorrect
  2. BDisclosing such interests only when the recommendation is a 'sell'
  3. CDisclosing interests orally to clients on request only
  4. DOmitting disclosure if the holding is below the analyst's personal materiality view

Explanation

Disclosure of financial interest, ownership and compensation must be made in the report regardless of the rating, so that the reader can judge objectivity. Selective, oral-only or self-judged materiality disclosure does not meet the requirement.

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