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Sarbanes-Oxley News & Developments
SEC Takes Aim at Companies That Retaliate Against AnalystsThe SEC is taking aim at corporations that retaliate against analysts who issue negative stock recommendations.
> > Federal securities regulators are launching a new front in their battle to lessen conflicts involving stock analysts. The SEC sent a letter to the NY Stock Exchange, Nasdaq and the American Stock Exchange,in April,asking them to consider new standards to prevent corporations from pressuring analysts. Before launching an investigation, the SEC asked major stock exchanges to consider rules to address the issue. Standards require issuers that list their shares on a stock market to follow certain rules or face being bumped from trading on that exchange.
Analysts who issue negative reports are at times cut off conference calls, left out of management presentations and threatened by management. Regulators fear such retribution could result in overly bullish stock recommendations, while companies say they are defending their stock against negative attacks.
Access to information is the core of the debate. Analysts need access to management and information to produce accurate research. By cutting off an analysts from information, or not returning calls, companies can force an analyst to change coverage or drop the company from research.
Source: The Wall Street Journal article dated June 19, 2003
Published:2003-06-19
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