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

An analyst owns shares in a company that she recommends to clients. According to the Standards of Professional Conduct, the analyst is most likely required to:

The analyst must disclose her beneficial ownership of the recommended shares. Ownership in companies recommended to clients is the most prevalent conflict requiring disclosure. Prohibiting ownership or ending coverage may be preferred in some cases, but the Standard does not require them.

  1. Adisclose her beneficial ownership of the sharesCorrect
  2. Bsell the shares before issuing the recommendation
  3. Cstop covering the company in all circumstances

Explanation

Standard VI(A) requires members and candidates to disclose any beneficial ownership interest in securities they recommend. A prohibition on ownership is the simplest method but may be overly burdensome and too restrictive, so it is not required. Dropping coverage is best practice in some cases but is not mandatory when disclosure is made.

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