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CFA Level I · CFA Level I Exam · Guidance for Standard III: Duties to Clients

An analyst at a brokerage firm changes a published recommendation on a stock from buy to sell. Which action is most consistent with Standard III(B) Fair Dealing?

The analyst should ensure all clients have a fair opportunity to act on the changed recommendation. Standard III(B) covers changes in prior recommendations as well as new ones, so selective early disclosure or unnecessary delay would treat clients unfairly.

  1. ATelling only the largest clients first
  2. BGiving all clients a fair opportunity to act on the changeCorrect
  3. CWaiting until the next quarterly report to tell clients

Explanation

Standard III(B) requires that information be disseminated so that all clients have a fair opportunity to act on every recommendation, including changes. Telling only large clients first is selective and discriminatory. Delaying until a quarterly report leaves clients exposed to outdated advice.

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