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April 30, 2002

Trade Group Questions Analyst Reforms

By Gregory Bresiger

Although generally praising efforts to reform the way analysts do their job, the Securities Industry Association is questioning whether some of the proposed reforms offered by the NYSE and NASD will be useful.

"Certain aspects of the proposed rules in their current term pose serious concerns. A number of these are likely to produce information that will be of dubious value to investors," according to Stuart Kaswell, the senior vice president and general counsel with the SIA, which filed a comment letter with the Securities and Exchange Commission.

Some of the areas in which the SIA is calling for changes in the proposed analyst reforms include:

1) Resolution of the inconsistencies between the NASD and NYSE rules.

2) Exclusion of the proposal to ban all research for an extended period by managers and co-managers following an initial public offering.

3) Clarification of the definition of research so that it does not unintentionally inhibit the flow of information and impair the use of technology to provide timely information to investors. 4) Clarification of the role of the legal and compliance staff in intermediating communications between research and investment staff. 5) Synchronization of the time periods for ownership reporting disclosure with those time periods mandating disclosure of ratings distribution and price information.