Analyst Association AIMR Offers Initial Reaction to Announcement of Proposed Analyst Rules.Business Editors CHARLOTTESVILLE, Va.--(BUSINESS WIRE)--Feb. 7, 2002 The Association for Investment Management and Research(R), the global non-profit organization A non-profit organization (abbreviated "NPO", also "non-profit" or "not-for-profit") is a legally constituted organization whose primary objective is to support or to actively engage in activities of public or private interest without any commercial or monetary profit purposes. of financial analysts, investment managers and other investment professionals, issued the following statement in response to yesterday's press release from U.S. Rep. Richard H. Baker (R-La.) on proposed reforms for market analysts to be announced To be announced (TBA) A contract for the purchase or sale of an MBS to be delivered at an agreed-upon future date but does not include a specified pool number and number of pools or precise amount to be delivered. today: "Although AIMR AIMR See Association for Investment Management and Research (AIMR). has not yet reviewed the rule proposal in detail, we applaud the commitment of U.S. Rep. Richard H. Baker (R-La.) and his associates in Congress, as well as the Securities and Exchange Commission and the National Association of Securities Dealers, to addressing the critical issue of analyst independence and objectivity. We look forward to reviewing their rule proposal in detail and providing them our comments and suggestions. "An AIMR task force on analyst independence, made up of people from various sectors of the investment profession, has been working actively on a parallel track to develop specific, measurable 'Research Objectivity Standards' that investment firms, both sell-side (brokerage) and buy-side (institutional investors), around the world could voluntarily adopt. "AIMR has kept Rep. Baker's office, the SEC and NASD NASD See: National Association of Securities Dealers NASD See National Association of Securities Dealers (NASD). apprised of the deliberations and recommendations of the AIMR task force, so it would not be surprising to find some of their recommendations in alignment with our own. Also, the issues paper that the AIMR task force released last July, 'Preserving the Integrity of Research,' laid out many of the issues that need to be addressed and made some preliminary recommendations, some of which we are pleased to note appear to be reflected in the Baker proposal. "We continue to move forward on the AIMR Research Objectivity Standards. Because AIMR is a global organization, we are addressing this issue in a global context, so that firms throughout the world will be able to adopt the standards we ultimately establish. "It appears that the rules Rep. Baker is proposing today address sell-side issues alone. While this is critical, we believe sell-side concerns cannot be addressed in isolation. AIMR's work will also address market participants who pressure sell-side analysts Sell-side analyst A financial analyst who works for a brokerage firm and whose recommendations are passed on to the brokerage firm's customers. Also called Wall Street analyst. to bias their reports, including corporate issuers and institutional clients, and include guidance on what the media can do to assist with greater analyst disclosure. "As to the Enron connection that Rep. Baker referenced in his press release yesterday, we do not believe that one can blame investment analysts for Enron. Corporate insiders obviously misled both employees and investors, and if analysts had asked the right questions - and apparently at least some of them did - they would have been misled, or, given the prohibitions of Regulation Fair Disclosure The U.S. Securities and Exchange Commission's (SEC's) Regulation Fair Disclosure, also commonly referred to as Regulation FD or Reg FD was an SEC ruling implemented in October 2000 ([1]). , the insiders would have had no reason to answer their questions at all if the questions addressed material information. In one case reported in the New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Times, even an analyst who had been negative on Enron for years, John Olson
subject to pressure from Enron because of his negativity, did not foresee the bankruptcy coming. When the stock price subsequently became low enough, he apparently believed it was undervalued Undervalued A stock or other security that is trading below its true value. Notes: The difficulty is knowing what the "true" value actually is. Analysts will usually recommend an undervalued stock with a strong buy rating. and put a 'buy' on it for the first time in years. "A separate question is whether the short-sellers (those who seek to profit from an anticipated decline in the stock price) had material non-public information on which they traded in 2001. This is an area that needs to be investigated." The AIMR Research Objectivity Standards would be the latest in a series of voluntary professional standards set by AIMR for individual investment professionals and for firms that employ investment professionals. For more than 30 years, AIMR's Code of Ethics Code of Ethics can refer to:
An experienced financial analyst who has passed examinations in economics, financial accounting, portfolio management, security analysis, and standards of conduct given by the Institute of Chartered Financial Analysts. (R) designation, as well as all CFA(R) candidates, annually re-commit to adhere. AIMR standards and guidelines for firms include Global Investment Performance Standards, Soft Dollar Standards and proposed Trade Management Guidelines. AIMR's membership includes 55,000 investment professionals in more than 100 countries. About 15 percent of AIMR's members work as sell-side analysts, while most of the rest are buy-side investment managers, analysts, advisors and consultants. Membership also includes 106 local professional societies in 29 countries. Perhaps best known worldwide for its rigorous CFA credential, AIMR provides global leadership for investment professionals by setting the highest standards in investment education, professional conduct, and advocacy programs. Headquartered in Charlottesville, Va., AIMR has offices in London and Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. . SOURCE: The Association for Investment Management and Research |
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