SEC Issues Alert on Analyst Conflicts

The SEC yesterday issued an investor alert warning the public about analyst conflicts. The alert warns about investment banking ties, ownership stakes analysts may have, and describes what analyst recommendations might really mean. The statement also aims to decipher boilerplate disclosure firms provide on research reports. The alert is posted at http://www.sec.gov/investor/pubs/analysts.htm Specifics

The SEC yesterday issued an investor alert warning the public about analyst conflicts.

The alert warns about investment banking ties, ownership stakes analysts may have, and describes what analyst recommendations might really mean. The statement also aims to decipher boilerplate disclosure firms provide on research reports.

The alert is posted at http://www.sec.gov/investor/pubs/analysts.htm

Specifics on how to ferret out possible conflicts are offered. The tips may actually be of more use to brokers than public customers. The SEC reminds investors that “analysts generally do not function as your financial adviser when they make recommendations.

“Talk to your broker or financial adviser and ask questions about the company and its prospects,” the alert adds. “But bear in mind that if your broker’s firm issued a positive report on a company, your broker will be hard-pressed to contradict it.”

Editor's note: For any comments regarding this article, or to suggest a story idea for RR Online or Registered Representative magazine, contact Editor in Chief Dan Jamieson at [email protected], Online Editor Rick Weinberg at [email protected], Online Managing Editor Cheryl Cooper at [email protected] or Senior Editor Michael Hayes at [email protected]

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