Hoping to restore investor trust, many regulatory bodies are lately adopting new rules requiring stock analysts to disclose in written reports and in interviews any financial conflicts of interest they have with the companies they cover.
The rules are aimed at bolstering shareholder confidence after financial disasters that called into question the accuracy of company audits and stock analysts reports.
Amongst others, the disasters include the collapse of the dot-com bubbles and the scandals surrounding bankrupt energy traders.
Some analysts misled investors by issuing bullish research reports on poorly performing companies to generate or keep lucrative investment-banking business from those firms.
Many interested groups say that the new rules are better than nothing. But they also say that those rules are years overdue and surely fall short of what is really needed.
These rules take an important first step but do not go nearly far enough to limit the ties between analysts and their firms investment-banking departments.
They also may not be sufficient to resolve some deeply rooted conflicts of interest in the field.
