Q1. Stately Research is a firm specializing in providing investment research relating to individual stocks. They have not implemented the Asset Manager Code of Professional Conduct and have recently been cited by regulatory authorities for deficiencies in their research. Specifically, they have been cited for unclear language regarding price target valuation methods and their associated risks, the percentage of securities that were rated a "buy," "hold," or "sell," and failure to adequately disclose “analyst industry view” ratings which ranked their analyst’s recommendations against a benchmark return such as the S& 500. Which of the following is least likely to be responsible for causing the security violations?

A)   Lack of funding or adequate staffing to conduct appropriate research.

B)   Inadequate technological resources to adequately research investments.

C)   The staff acting in an unethical manner.

答案和详解如下：

Q1. Stately Research is a firm specializing in providing investment research relating to individual stocks. They have not implemented the Asset Manager Code of Professional Conduct and have recently been cited by regulatory authorities for deficiencies in their research. Specifically, they have been cited for unclear language regarding price target valuation methods and their associated risks, the percentage of securities that were rated a "buy," "hold," or "sell," and failure to adequately disclose “analyst industry view” ratings which ranked their analyst’s recommendations against a benchmark return such as the S& 500. Which of the following is least likely to be responsible for causing the security violations?

A)   Lack of funding or adequate staffing to conduct appropriate research.

B)   Inadequate technological resources to adequately research investments.

C)   The staff acting in an unethical manner.

Correct answer is C)

Stately’s lack of compliance with security laws can most likely be traced back to a lack of upper level management supporting a high level of ethical behavior. Ethical leadership starts from the support of upper management which leads to adequate funding and staffing to provide the right resources in hiring enough qualified staff and employing the technology to adequately research and report their stock findings.