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

Analyst Meera Nair holds shares of Kaveri Textiles Ltd. through her spouse, who bought them last year. Meera now plans to publish a report on Kaveri Textiles. Which course of action is most consistent with research analyst conduct norms?

She should publish with disclosure of her relative's holding, consistent with the disclosure requirements, and comply with the firm's conflict and trading policies. Omitting the holding hides a conflict, trading around publication risks front-running, and tailoring the target price to the holding would destroy objectivity.

  1. APublish the report and omit mention of the holding since the shares are in her spouse's name
  2. BPublish the report with disclosure of the holding of her relative, in line with the disclosure requirements, and follow the firm's conflict policyCorrect
  3. CSell the shares on the day of publication without any disclosure
  4. DPublish the report only after raising the target price to reflect her relative's interest

Explanation

Holdings of the analyst and of relatives are covered by disclosure requirements, so the holding must be disclosed and the firm's conflict and trading policies followed. Omitting it hides a conflict, quietly selling around publication raises front-running concerns, and adjusting the target for personal benefit is improper.

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