Series 79 practice questionmediumResearch Analyst Conflicts
Which of the following is permitted with respect to analyst compensation under FINRA rules and the Global Research Analyst Settlement?
- ACompensation may be determined solely by the investment banking department
- BAnalyst compensation can be directly linked to revenue from specific investment banking transactions
- CAnalyst compensation can be based on the analyst’s involvement in specific deals
- DCompensation may be influenced by overall firm performance but must not be directly tied to investment banking deals✓ Correct answer
Explanation
Why D — Compensation may be influenced by overall firm performance but must not be directly tied to investment banking deals
Analyst compensation may reflect overall firm performance, but direct linkage to investment banking transactions is prohibited to avoid conflicts. The traps all represent prohibited compensation arrangements.
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