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Joni Black, CFA, works for a portfolio management firm. Black is a partner of the firm and is primarily responsible for managing several large pension plans. Black has just finished a research report in which she recommends Zeta Corporation as a Strong Buy. Her rating is based on solid management in a growing and expanding industry. She just handed the report to the marketing department of the firm for immediate dissemination. Upon returning to her desk she notices a news flash by CNN reporting that management for Zeta Corporation is retiring. Black wishes she did not recommend Zeta Corporation as a Strong Buy, but believes the corporation is still a good investment regardless of the management. What course of action for Black is best? Black:

A) is not obligated to revise the recommendation regarding material changes in the corporation because the information was public and not private information.

B) should report the new information to her immediate supervisor so that they can determine whether or not the marketing department should send out the report as written.

C) may send out the report as written as long as a follow up is disseminated within a reasonable amount of time reflecting the changes in management.

D) should revise the recommendation based on this new information.

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Answer and Explanation

This question is related to Standard V(B) which states that CFA Institute members should use reasonable judgment regarding the inclusion or exclusion of relevant factors in research reports. The change in management was a relevant factor and must be disclosed before dissemination.

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Roger Halpert, CFA, prepares a company research report in which he recommends a strong "buy." He has been careful to ensure that his report complies with the CFA Institute Standard on research reports. According to CFA Institute Standards of Professional Conduct, which of the following statements about how Halpert can communicate the report is most correct?

A) Halpert can transmit his report by computer on the Internet.

B) Halpert can make his report in person, by telephone, or by computer on the Internet.

C) Halpert can make his report by telephone.

D) Halpert can make his report in person.

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Answer and Explanation

A report can be made via any means of communication, including in-person recommendation, telephone conversation, media broadcast, and transmission by computer such as on the Internet.

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An analyst belongs to a nationally recognized charitable organization, which requires dues for membership. The analyst has worked out a deal that he provides money management advice in lieu of paying dues. For this arrangement to comply with the standards, the analyst needs consent from:

A) both his supervisor in the organization and his regular place of work.

B) his supervisor in the organization only.

C) his supervisor in his regular place of work only.

D) no one since it is a volunteer organization.

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Answer and Explanation

An employee/employer relationship does not necessarily mean monetary compensation for services. If the analyst is performing services for the organization, then the analyst must treat the position as if he were an employee and obtain consent from both his supervisor in the organization and in his regular place of work.