(December 8 – 08:55 ET) – The board of the National Association of Securities Dealers has pproved a resolution requiring financial services professionals to disclose possible conflicts of interest during scheduled public appearances.

With the explosion of all-business news channels such as CNBC, CNNfn, Bloomberg TV and ROBTv here in Canada, some analysts have become media stars for their financial insights. Heavy hitters such as Goldman Sachs strategist Abby Joseph Cohen can move the market single-handedly with a few comments. But the regulators are really concerned about possible conflicts between recommendations and investment banking mandates.

“It is important for investors to have confidence that a recommendation made by an analyst, or other financial services professional, is based solely on the merits of the investment and not that person’s financial interest. We look forward to working expeditiously with the SEC and the NYSE to draft similar rules covering brokers and investment advisors,” says Robert Glauber, NASD CEO and president.

“The NASD board’s decision today to support greater disclosure of conflicts of interest by analysts who make stock recommendations in print or on television is an important and commendable step. The commission looks forward to developing rules with the NASD and the New York Stock Exchange in short order that will establish a fair and workable disclosure regime that promotes public confidence,” says SEC chairman Arthur Levitt.

“Knowing whether an analyst’s employer underwrote a recommended stock or whether his or her firm has a significant position in a recommended stock is important information. Investors deserve to know what possible incentives an investment services professional may have in making a particular recommendation. This can only improve the credibility of those who make recommendations to the public – credibility that has come under attack in recent months,” says Levitt.
-IE Staff