Mailaka Securities (MS) advertises the use of a "bottom up" investment style in its marketing material. Recently, MS senior management decided to switch to a "top down" approach, citing the fact that it is less labor intensive. All other aspects of the research process are to remain the same. The head of research at MS, Mara Cherogony, CFA, is instructed to supervise the implementation of the new procedures, notify clients of the changes, and revise the text of marketing materials when new material is produced. Which of the following CFA Standards pertaining to Investment Analysis, Recommendations and Actions is Cherogony least likely in danger of violating?
C is correct because research can still be considered diligent and having a reasonable basis if done using a "top down" research methodology as opposed to a "bottom up" methodology. By not communicating to prospective clients the change in the investment process through the delay in the creation of new marketing material however Cherogony violates Standard V (B) -Communication with Clients which requires Members and Candidates to disclose to clients and prospective clients the basic format and general principles of the investment processes they use to analyze investments, select securities and construct portfolios and must promptly disclose any changes that might materially affect those processes. As a supervisor, Cherogony is responsible for ensuring compliance with the Code and Standards.