CMFAS RES5 MAS Guidelines question: FAA-G13's requirements on disclosure and record-keeping for research

CMFAS RES5MAS Guidelines

Which statement reflects FAA-G13's requirements on disclosure and record-keeping for research?

A A generic 'may or may not have an interest' boilerplate statement is sufficient, and records need not be kept at all
B Conflicts must be disclosed clearly and prominently, not as boilerplate, with records kept for at least 5 years
C Disclosure of conflicts is optional, so long as the analyst believes the research is honest
D Records of the basis for each recommendation must be kept for 12 months and then destroyed

Show the answer and explanation

Answer: B. Conflicts must be disclosed clearly and prominently, not as boilerplate, with records kept for at least 5 years

FAA-G13 requires disclosures of actual and potential conflicts to be in writing, clear and prominent, complete, concise and specific — generic 'may or may not have interest' boilerplate does not achieve this. The firm must keep records of the bases and supporting documents of research recommendations for not less than 5 years.

Common mistake

Boilerplate 'may or may not' wording is explicitly cited as inadequate; retention is at least 5 years.

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