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." Suppose that Pickford already owns an interest in the biotech firm, but Munford Stanley is not the underwriter. 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

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."  Suppose that Pickford already owns an interest in the biotech firm, but Munford Stanley is not the underwriter. 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

Quizplus · Accepted Answer

Mary Pickford has a conflict of interest since she already owns an interest in the biotech firm and is recommending it to others. She must disclose this conflict of interest to all purchasers to ensure transparency and fair dealing. Munford Stanley may or may not have a conflict of interest depending on their relationship with the biotech firm.

Mary Pickford Is an Analyst for Munford Stanley, an Investment