Averting conficts of interest

Associated Press

Highlights of rules, approved yesterday by federal regulators, that are designed to curb conflicts of interest among financial analysts. Some take effect immediately; others will be phased in during the next six months:

• Analysts must clearly disclose, in research reports and television and radio interviews, if they own shares in companies they are recommending. Investment firms also must disclose their stock holdings.

• Firms are barred from tying their analysts' compensation to related investment-banking business.

If an analyst's compensation is based on a firm's general revenues from investment banking, that must be disclosed in stock research reports.

• Analysts are prohibited from offering or threatening to withhold a favorable research rating or specific price target for a stock to lure investment-banking business from companies.

• Research analysts cannot be supervised by the investment banking department of a firm, and employees in the investment banking area are prohibited from discussing research reports with analysts before they are issued.