A bank threatens to credit ration unless the customer agrees to let the bank's securities affiliate do its securities underwritings.Identify the conflict of interest in this scenario.

Question

Quizplus · Accepted Answer

The conflict of interest in this scenario is the tie-in, where the bank is using its position as a creditor to force the customer to use its securities affiliate for underwriting. This can lead to a situation where the customer is not getting the best deal possible and the bank is prioritizing its own profits over the customer's best interest.

A Bank Threatens to Credit Ration Unless the Customer Agrees