SIA Calls For Rule Change For Research Analysts

by Glen Shapiro, LawAndTax-News.com, New York

31 August 2005

In a letter sent to the National Association of Securities Dealers (NASD) and the New York Stock Exchange earlier this month, the US Securities Industry Association called for the rules governing research analysts to be reformed.

The letter reportedly condemned some of the regulations imposed on analysts as "ineffective, unduly vague or burdensome", citing the prohibition on publishing reports during the 'blackout'period which surrounds the expiration of lockup provisions on restricted stock as a key concern.

The rule was approved in 2003, and was designed to prevent the issuing of so-called 'booster-shot' reports, which often supported share prices whilst company executives sold their stock.

However, speaking to Investment News this week, SIA's deputy general counsel, George Kramer called for the prohibition to be lifted, arguing that the rules on reporting during the quiet period "really disadvantage retail investors, because retail investors are most in need of Street research".

He went on to add that no evidence of abuse had been found in connection with the booster-shot reports, and suggested that the SEC regulation requiring analysts to certify that the views expressed in research reports accurately reflect their own would in any case prevent such activity from taking place.

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