Securities Analysts Recommendations

Financial analysts exert considerable influence in today’s marketplace. Analyst recommendations can significantly move a company’s stock price, especially when they are widely disseminated through television appearances or through other electronic and print media. The SEC receives a number of complaints about analysts who recommend buying a stock in a company, where the investor believes the analyst has a financial or some other interest in the company.

Analysts must disclose possible conflicts of interest whenever they recommend the purchase or sale of a specific security. For example, analysts must divulge if they or the brokerage firm they work for has a financial position in a recommended security. Analysts must also disclose if their firms make a market in the security or have an investment banking relationship with the company.

Investors need to ask questions about their investments and know what their buying and why.