Question #25
Reading: Reading 42.2 Standards of Professional Conduct Guidance for Standards II
PDF File: Reading 42.2 Standards of Professional Conduct Guidance for Standards II.pdf
Page: 14
Status: Correct
Correct Answer: A
Question
In the course of reviewing the Corn Co., an analyst has received comments from management that, while not meaningful by themselves, when pieced together with data he has accumulated from outside sources, lead him to recommend placing Corn Co. on his firm's sell list. What should the analyst do?
Answer Choices:
A. Not issue the report until the comments are publicly announced
B. Show his report to his own manager and counsel for their review since this information has become material once it was combined with his analysis
C. The comments are non material and the report can be issued as long as he maintains a file of the facts as supplied by management
Explanation
This is an example of the mosaic theory where separate pieces of nonmaterial information
are pieced together to make an investment recommendation.