Reading 2-V: Standards of Professional Conduct & Guidan Investment

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CFA Institute Area 1-2: Ethical and Professional Standards
Session 1: Code of Ethics and Professional Standards
Reading 2-V: Standards of Professional Conduct & Guidance: Investment Analysis, Recommendations, and Action
LOS C.: Record Retention.

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According to CFA Institute Standards of Professional Conduct, members should do all of the following to meet the compliance procedures for having a reasonable basis for recommendations, EXCEPT:

A) analyze the client's investment needs.

B) distribute a detailed, written research report to clients with each recommendation.

C) maintain files to support investment recommendations.

D) analyze the investment's basic characteristics before recommending a specific investment to a broad client group.

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Answer and Explanation

Standard V(C), Record Retention, requires that members maintain appropriate records to support the reasonableness of such recommendations or actions, but they are not required to distribute a research report with each recommendation.