Mary Pickford is an analyst for Munford Stanley, an investment banker. She has touted the stock, an initial primary offering (IPO), of an obscure biotech firm as a "must buy." Munford Stanley is the underwriter for the IPO. Pickford:
A) Does not have a conflict of interest.
B) Has a conflict of interest, but it is acceptable in IPOs.
C) Has a conflict of interest that must be disclosed to all purchasers.
D) Does not have a conflict of interest, but Munford Stanley does.
E) None of the above

Question

Quizplus · Accepted Answer

Mary Pickford has a conflict of interest because she is an analyst for Munford Stanley, which is the underwriter for the IPO. Her recommendation to buy the stock may be biased due to her employer's involvement in the offering. Therefore, she must disclose this conflict of interest to all purchasers.

Mary Pickford Is an Analyst for Munford Stanley, an Investment