Diligence in Investment Analysis: Ethical Disclosure

Very Hard Cfa Institute Code And Standards Investment Analysis - Diligence

As an investment analyst at a large financial firm, you are responsible for conducting due diligence on a potential investment in a startup technology company. During your research, you discover that one of the key founders has a history of bankruptcy and legal disputes, which might affect the company's future performance.

The firm's compliance officer reminds you of the CFA Institute Code and Standards, particularly regarding the duty of diligence in investment analysis. This code emphasizes the importance of thorough research and ensuring that all material facts are considered before making investment recommendations.

Faced with this situation, you prepare a report summarizing your findings. However, you must decide how to present the founder's background in your analysis to ensure that you adhere to ethical standards.

Which action would best align with the CFA Institute's requirement for diligence in investment analysis?

Provide a brief mention of the founder’s history but focus primarily on the company's promising projections and potential growth.

Fully disclose the founder's history of bankruptcy and legal issues in your report, highlighting the potential negative impact on the investment.

Exclude any mention of the founder's past to avoid biasing the readers against the investment opportunity.

Hint

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