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CFA Level I · CFA Level I Exam · Guidance for Standard VI: Conflicts of Interest

A research analyst's wife inherits a large holding of stock in a company the analyst has covered, and the analyst is asked to write a follow-up report on it. Which action is the best practice under Standard VI(A)?

Best practice is to ask the employer to assign another analyst to write the follow-up report, thereby avoiding the conflict. The minimum is disclosure of the wife's ownership to the employer and in the report, but avoidance is preferred.

  1. AWriting the report and disclosing the holding only to his wife
  2. BAsking the employer to assign another analyst to draft the reportCorrect
  3. CWriting the report and disclosing the holding only in the report

Explanation

At minimum the analyst must disclose the wife's ownership to his employer and in the follow-up report. Best practice is to avoid the conflict by having another analyst write the report. Both disclosure-only options fall short because they omit one of the required disclosures or leave the conflict in place.

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