An Ethics Question
This is a question from our visitor:
This is a ethics question. I got it from a book.
It says it’s okay for a investment firm to base its security on a third-party research that it purchases as long as the firm periodically checks the criteria of reasonableness and objectivity by V(A).
But my question is how about disclosure I(C) Misrepresentation and not giving credit. Should not the firm tell it’s clients that it’s basis is a third party well researched report?
Also if there is no information in the question weather there is or there is no disclosure, must we assume one or the other?
Suggestions:
This question is about how a stock is chosen in the portfolio. It did not mention anything about reporting to the customers. Therefore, misrepresentation is not an issue here. Rather, when the manager chooses that particular stock based on other research reports, he has to be careful to check for V(A). If this is about reporting, then, yes, misrepresentation has to be taken into account.