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To: Square_Dealings who wrote (78151)	10/9/2001 7:17:52 AM
From: long-gone	Respond to of 116895

He is simply protective of his southern brothers in the same industry - btw I see them in a more truthful light, where not all are of them are crooks .. or honest.

To: Square_Dealings who wrote (78151)	10/9/2001 7:43:22 AM
From: long-gone	Respond to of 116895

See, you must be at least somewhat correct about some of them being crooks, or there would be no need for regulation of this sort! Wednesday July 11, 1:30 pm Eastern Time OUTSIDE THE BOX: And Lead Our Analysts Not into Temptation...., Shelley Souza, Optionetics.com I feel very foolish reading reports today that Merrill Lynch (MER) will enforce a new policy, effective immediately, prohibiting analysts from owning stock in companies they cover. I had naively assumed this was always the case. Otherwise, isn’t it like doctors favoring the prescription of drugs manufactured by companies whose stock they own? The story, which appears in Wired News and CNet (CNET), reports that the National Association of Securities Dealers issued a proposal last week requiring analysts to disclose their holdings when they appear on TV. Merrill made the decision to enforce their new policy as an effort to ward off further criticism that analysts’ reports are biased. Analysts have been widely criticized for keeping “Buy” recommendations on stocks, long after it was clear that it was detrimental to clients to do so. Most mid-sized to large companies have house analysts. They provide a service that is not only meant to add value for the client but is also a practice which can generate substantial revenue for the brokerage house. Normal practice is to retain a Chinese Wall between the analysts and the brokers. Marty Schwartz shared an experience with Jack Schwager in Market Wizards. Schwartz told Schwager that a leaked report of his bearish analysis of the hospital industry caused health care stocks to start “plummeting.” (He lost his job as a result, although was later exonerated). Since analysts’ reports can and do influence the markets, it seems surprising that governing bodies like the S.E.C., which was formed to protect investors from illegal tock price manipulation, haven’t regulated against the practice of analysts owning stocks on which they also report. Many brokerage houses are market makers or “principals” in hundreds of stocks, meaning they hold a large inventory of certain stocks. When a brokerage makes a market in a particular stock, they do not have to go to an outside specialist to price the bid ask. So when a client calls in wanting to buy or sell XYZ stock, if the brokerage is carrying the stock, they conduct the transaction in house. They benefit by retaining the profit from the spread twice. As the market maker, they are now holding the other side of your position; they stand to gain when you buy as well as when you sell. Merrill has proposed that stocks currently owned by analysts can either be sold off immediately; put into a blind trust account; or can only sell when the intermediate and long-term opinions are “Neutral” or lower. According to the report on CNet, many analysts in other brokerages are already disclosing “material holdings.” CNet wrote, “For example, Prudential recently disclosed that Internet analyst Mark Rowen held shares of eBay, but said he did not have material positions in Amazon.com, Priceline.com and other companies he covers. Prudential defines material positions as those worth less than $10,000.” But I’m thinking material positions are those worth more than $10,000. The main point is that disclosure is finally taking place and not a moment too soon. Merrill is already on the watch list for allegedly pumping IPO stocks in a manner that amounts to little more than a Ponzi scheme [for a report that cites class action suits against Merrill, among others, for illegal practices in IPO stocks, see Wired News, “Hot New IPO Trend: Suing”, Joanna Glasner, 6/6/01]. Shelley Souza Senior Writer & Trading Strategist Optionetics.com ~ Your Options Education Site Visit Shelley Souza’s Forum biz.yahoo.com