hard · CFA Level I ethics
Elena, a CFA charterholder at Lumen Credit, covers Solstice Utilities. Solstice is an investment banking client of Lumen. Elena’s supervisor at Lumen pressures her to issue a "Strong Buy" to ensure Solstice remains a client. Elena agrees but includes a disclaimer in the report's fine print on the final page regarding Lumen’s banking relationship. Elena also uses Solstice's own internal "Economic Value" model in her report, labeling the resulting price target as a "mathematical fact." By issuing a "Strong Buy" rating due to internal supervisor pressure, Elena has primarily violated:
- Standard VI(C) Referral Fees.
- Standard I(B) Independence and Objectivity.
- Standard III(A) Loyalty, Prudence, and Care.
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