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Investment banks often have conflicting roles. They sometimes act for

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Manager
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Re: Investment banks often have conflicting roles. They sometimes act for  [#permalink]

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New post 11 Jan 2019, 12:14
GMATNinja wrote:
faltan wrote:
"... but their analysts also sometimes send unfavorable reports on the financial health of companies for whom they are raising capital to other clients who wish to make investments."

could anyone dissolve this clause? I'm confused with the subject. Who invest to who? reports for client companies and to which "other" clients?

faltan, this clause is a bit of a mouthful! Let me try to clarify it in the context of the rest of the passage:

Quote:
Investment banks often have conflicting roles.

Clear enough, right? Don't worry, it gets worse...

Quote:
They sometimes act for a client company by raising capital from other investment institutions as advantageously as possible,

This is the first "role" of an investment bank. In this part of the sentence, the investment bank is working for a client company. Specifically, they are raising capital as advantageously as possible. On to the part that tripped you up:

Quote:
but their analysts also sometimes send unfavorable reports on the financial health of companies for whom they are raising capital to other clients who wish to make investments.

Here we see the role played by investment banks that conflicts with the role defined in the first part of the sentence. "Their analysts" refer to the investment bank's analysts. What are these analysts doing? They're sending unfavorable reports about client companies. The "client companies" are the same companies referred to in the first clause of the sentence.

Now, instead of working for these companies to advantageously raise capital, the analysts are working against them by sending unfavorable information. And to whom are they sending this information? To "other clients who wish to make investments." These are other clients of the investment bank who want to make an investment in the "client companies."

This is the heart of the conflict: on one hand, the investment banks want to raise capital for their "client companies." On the other hand, if one of their other clients wants to make an investment in their "client companies," they may have to send unfavorable reports and discourage the investment.

I hope this clears it up!


All clear, thanks! i think my knowledge about investment banking was too narrow.
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Re: Investment banks often have conflicting roles. They sometimes act for  [#permalink]

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New post 12 Jan 2019, 08:13
Could someone explain why option c is wrong?

wouldn't the sharing of information pose as a hindrance?
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Re: Investment banks often have conflicting roles. They sometimes act for &nbs [#permalink] 12 Jan 2019, 08:13

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Investment banks often have conflicting roles. They sometimes act for

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