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

A research analyst's spouse holds shares of a company the analyst is about to cover. Which action best reflects the expected conduct under the research analyst regulations?

The analyst should disclose the spouse's holding in the report and in public appearances and follow the firm's conflict-of-interest policy. Relatives' holdings are a potential conflict, and concealing them or biasing the rating would breach the requirement of objective, fair research.

  1. ADisclose the holding in the research report and any public appearance, and follow the firm's conflict-of-interest policyCorrect
  2. BKeep the holding confidential since it belongs to the spouse and not the analyst
  3. CCover the company but use a more optimistic rating to protect the family's interest
  4. DDisclose the holding only if the value exceeds the analyst's annual income

Explanation

Holdings of the analyst and certain relatives are treated as a potential conflict of interest and must be disclosed in reports and public appearances. Concealing it or tilting the rating violates the duty of objectivity. There is no income-based disclosure threshold of the kind in the last option.

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