CBS Evening News

Taking Stock Of Analysts

By CBSNews.com staff CBSNews.com staff

July 13, 2001 / 4:42 PM EDT / CBS

Is it acceptable for analysts to buy stock in companies they research?

Merrill Lynch & Co., for one, says it is not. This week, the brokerage forbade its analysts from holding stocks that they recommend to avoid the appearance of conflict of interest. CBS News Correspondent Russ Mitchell spoke to a former analyst and to an unsuspecting client who believed false assessments.

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But critics say that analysts need to go even farther to protect their objectivity. One good move, they say, might be to stop paying bonuses to analysts who bring business to the firm's investment banking operations.

Also this week, the Association for Investment Management and Research (AIMR) released an issues paper that recommends way to encourage more objective securities research. AIMR is a worldwide group that represents financial analysts.

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