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Perry Smith is a research analyst for Hugley Financial Corp. For the past several weeks, Smith has diligently researched the economic condition of BNS Inc., an international pharmaceuticals manufacturer. Smith has determined that the BNS’ secondary common stock offering is a strong buy and has disseminated this opinion to Hugley’s research subscribers. One month after issuing the recommendation, the price of BNS’ stock had risen by over 13 percent. The director of Hugley’s investment banking division, which underwrote BNS’ secondary offering, called to thank Smith for his participation in the offering and to notify him he will receive a stock option bonus next week as a result of the outstanding performance of BNS’ stock. Has Hugley Financial Corp. violated any CFA Institute Research Objectivity Standards? A. No. B. Yes, since the analyst’s bonus was inappropriately structured as stock options. C. Yes, since the performance of the secondary offering led to a bonus for the analyst. |