Business PracticesQuestion 70 of 100
A broker-dealer publishes a market letter recommending a stock in which it holds a substantial proprietary position and for which it makes a market. The letter must:
a.Say nothing about the firm's position, to avoid influencing readers
b.Disclose the firm's position and its role as a market maker, and present projections as opinions rather than as fact
c.Guarantee the accuracy of the price target
d.Be filed with the SEC before publication
Explanation
Publishing research or a market letter without disclosing that the firm makes a market in or holds a position in the security conceals a material conflict of interest. Forecasts must be identified as opinion, since presenting a projection as an assured fact is a misrepresentation. No firm can guarantee a price target, and routine market letters are not filed with the SEC for approval.
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