John, as an investment advisor, registered with the SEC, it is my experience that ALL investment advisors are routinely informed of the disclosure requirements. One of these is that if the analyst, or the firm the analyst works for, or the accounts handled by that firm, or any business or individual that might have taken action based on the analyst opinion, takes a position in the stock (long, short, calls, puts, whatever) BEFORE the analyst views are publicized, the analyst or his firm MUST, repeat MUST disclose any transactions related to that stock. In other words, if the firm or its clients had purchased puts a few days before the announcement, the firm would have been REQUIRED to state its financial interest.
One way investment advisors frequently get around this requirement when interviewed on TV is to use certain kinds of wording in the questions and answers, such as:
"Can you tell us some of the stocks you like here?"
"Well, I like such and such and so and so, but I don't like these other stocks."
Notice the use of the term "like." That is construed to be pure opinion (and not actionable), whereas if the analyst said he would or would not "recommend" a certain stock, that would be taken as a recommendation and subject to the disclosure laws.
Some TV shows will go even farther to protect themselves. Anyone watching Wall Street Week will probably recall that on numerous occasions, the host says something like, "Of course those are opinions and not recommendations and don't necessarily represent the views of this program."
When someone says, in effect, "I think the stock will go to $50," that could be construed to be opinion, but in the context in which the statement has been made, given the position of the speaker and the audience, it could also be construed to be a recommendation. If nothing else, regardless of whether it is opinion or recommendation, not showing a basis for the statement is simply bad journalism and worse analysis.
Art Bechhoefer |
