Charlottesville, Va. (March 12, 2004) -- A joint task force of the Association for Investment Management and the National Investor Relations Institute has unveiled best practices guidelines for corporate issuers and analysts.
Among the issues addressed in the guidelines released yesterday are: information flow between analysts and corporate issuers; analysts' conduct in preparing and publishing research reports and making investment recommendations; corporate issuers' conduct in providing analysts with access to corporate management; review of analyst reports by corporate issuers; and issuer paid research.
The task force, formed in August 2003, consists of six AIMR members and eight NIRI investor relations professionals from the U.S., Canada and Europe. Jonathan Boersma, AIMR vice president of professional standards, said that when AIMR released its research objectivity standards, it received comments from NIRI on the issue of companies pressuring analysts. The two groups, which Boersma noted are sometimes on "opposites sides of the fence," decided to try to address the issue in a joint effort.
"We came together on this task force because we agreed that, in the end, investors interests are paramount," Boersma said. The task force invited members of the Securities and Exchange Commission, the New York Stock Exchange, the NASDAQ and the NASD to participate as observers. He noted that the guidelines are not specific to the U.S., but are intended to be international in scope.
"The guidelines list some particulars that will help to alleviate some of the problems -- one of which is developing an access policy that outlines what types of access will be granted and to who," Boersma said. "This policy will establish what people can expect and help them determine if they're being treated fairly. Some companies have a policy informally now, but formalizing it will help determine if it's being applied consistently."
The voluntary guidelines also list prohibited behaviors, such as discriminating against an analyst based on prior research recommendations or denying access.
"It really is a two-way street," Boersam added. "We lay out some very specific things for analyst conduct." He added that widespread application of the voluntary standards by publicly traded companies and analysts might help prevent regulations being imposed upon them.
The guidelines, available online at www.aimr.org/standards, are open for public comment until May 31. The groups expect to finalize them in the early fall.
-- Melissa Klein Aguilar
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