 “Mahoney's interference with research reports”

Violation: Standard I(C) Misrepresentation

Reason: Members & candidates are not allowed make any misrepresentations (or in this case,
interfere) relating to investment analysis, recommendations, actions, or other professional
activities.

 “Stewart's compensation based on investment banking business”

Violation: Standard IV(B) Additional Compensation Arrangements
Reason: Stewart receives bonuses based on her work on investment banking assignments and
her contributions to generating investment banking business. This in in direct violation of IV(B)
as members & candidates to not accept any gift, benefit, compensation, or consideration that
reasonably could be expected to compromise their own or another’s independence and
objectivity. The compensation plan is directly affecting her independence & objectivity here.

 “Stewart's initiation of coverage on prospective clients”.

Violation: Standard VI(A) Disclosure of Conflicts
Reason: Stewart initiates full research coverage on prospective and current corporate finance
clients and provides favorable recommendations. This violates VI(A) which requires members &
candidates to make full and fair disclosure of all matters that could reasonably be expected to
impair their independence and objectivity or interfere with respective duties to their clients,
prospective clients, and employer.

 “Stewart's request for a consulting fee from KDN”

Violation: Standards I(B) Professionalism & IV(B) Additional Compensation Arrangements
Reason: Stewart requests a consulting fee from KDN, a company that she initiated coverage on
but did not choose TUC as an underwriter. She receives a check from KDN's CFO and shares it
with her interns as a bonus. This violates IV(B) & I(B) which requires members & candidates to
not engage in any professional conduct involving dishonesty, fraud, or deceit or commit any act
that reflects adversely on their professional reputation, integrity, or competence.

 “Singh's luncheon”
Violation: Standard II(A) Material Nonpublic Information
Reason: Singh organized a luncheon for some of TUC's largest clients and invited Stewart to be
the guest speaker. During the luncheon, Stewart provided the clients with details on her
valuation, recommendation, and target price for DTG, two days before the IPO. This violates II(A)
which states that members & candidates must not act or cause others to act on material
nonpublic information.

 “TUC's trade allocation policy”

Violation: Standard III(B) Fair Dealing
Reason: Singh reviewed TUC's new trade allocation policy with the clients, which states that the
allocation to client accounts will be based on the type of account, the size of the account, and
the amount of fees generated by the account. This violates III(B) which states that members &
candidates must deal fairly and objectively with all clients when providing investment analysis,
 making investment recommendations, taking investment action, or engaging in other
professional activities.

 “Stewart's daughter”
Violation: Standard VI(A) Disclosure of Conflicts
Reason: Stewart did not disclose in her research report that her daughter worked for DTG as a
buyer in their Menswear Department. This violates VI(A) which states that members &
candidates must make full and fair disclosure of all matters that could reasonably be expected to
impair their independence and objectivity or interfere with respective duties to their clients,
prospective clients, and employer.

 “Stewart's acceptance of transportation and meals from DTG”

Violation: Standard I (B) Independence and Objectivity
Reason: Stewart accepted transportation and meals from DTG during her visit to their
headquarters, which could compromise her impartiality and create a conflict of interest. This
violates I (B) which states that members & candidates must use reasonable care and judgment to
achieve and maintain independence and objectivity in their professional activities. Key word
here is “reasonable care” which Stewart did not show in my opinion.

(Saif bhai confirmed nahi hai yay wala 50/50 hai. Ho bhe sakti hai or nahi bhe).

 “Stewart's purchase of shares in the three Latin American department store chains”
Violation: Standard II (A) Material Nonpublic Information
Reason: Stewart purchased shares in 3 Latin American department store chains based on the
confidential information she obtained from DTG. She should have refrained from trading on or
disclosing the information until it became public. This violates II (A) which states that members &
candidates must not act or cause others to act on material nonpublic information.

 “Stewart's hiring of the son of DTG's CFO”

Violation: Standard IV (C) Responsibilities of Supervisors
Reason: Stewart hired the son of DTG's CFO as an intern in the research department. She should
have avoided any appearance of favoritism or undue influence and ensured that the hiring
process was fair and objective. This violates IV (C) which states that members & candidates must
make reasonable efforts to ensure that anyone subject to their supervision or authority complies
with applicable laws, rules, regulations, and the Code and Standards.

 “Debenham's approval of Stewart's research update on DTG”

Violation: Standard I (C) Misrepresentation
Reason: Debenham approved Stewart's research update on DTG without disclosing the potential
conflict of interest arising from the hiring of the CFO's son and the proposed acquisition deal. He
should have ensured that the research report was fair, accurate, and complete and disclosed any
relevant information that could affect the analysis or recommendations. This violates I (C) which
states that members & candidates must not knowingly make any misrepresentations relating to
investment analysis, recommendations, actions, or other professional activities.