Sell-Me-Now, Inc.: Investment Recommendation and Market-Buy Order

Investment Recommendation: Sell-Me-Now, Inc.

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Question

Anamese Barrytone is a broker with Caledonia Investments. Caledonia also provides investment recommendations through its weekly letter. In its last letter released 3 days ago, Caledonia changed its investment recommendation on Sell-Me-Now, Inc. from "hold" to "sell." Anamese has just received a call from Sloan who wants to place a market-buy order on 600 shares of Sell-Me-Now. Anamese should

Answers

A. not execute the order since her firm has placed the stock on the sell list.

B. inform her supervisor about the order and then decide if the order should be executed.

C. execute the order as is without trying to change Sloan's mind by telling him about Caledonia's recommendation since she is required to be a neutral broker by SEC rules.

D. inform Sloan about the change in Caledonia's recommendation before executing the order.

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Explanations

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A. B. C. D.

According to the SEC rules, if a person places an order contrary to current firm recommendation, he or she should first be informed about the firm's position before accepting the order. Standard IV (B.3) - Fair Dealing.

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