Investment analysts' group calls for rules to ensure objectivity

SIAI chairman Mr Mark Merrigan said allegations of misconduct and a lack of objectivity in research analysis, which have surfaced in the US of late, tainted the reputation of all investment professionals.

The Society of Investment Analysts in Ireland (SIAI) has called for the introduction of a set of new measures that would ensure the objectivity of financial analysts in the Republic.

The call for the new measures comes after a spate of corporate scandals in the US, where the relationship between the companies involved and analysts was called into question.

The SIAI, an affiliate of the worldwide Association for Investment Management and Research (AIMR), is calling for measures put forward by that group to be implemented in the State.

The AIMR proposals include a call for a formal written policy on the independence and objectivity of analysts' research. It also says analysts, who present their research in public, should disclose "personal as well as any of their firms' conflicts of interests".

"It is essential that research analysts conduct high-quality research, free from bias due to pressures, whether from their own firms, from subject companies, from investing clients or from other sources," he said.

Other AIMR proposals include the signing-off of research reports as "reasonable and adequate".

The group also believes analysts should be segregated from the investment banking department at their firms "including a ban on corporate bankers modifying, approving or rejecting research".

It says there should be a ban on telling subject companies, ahead of publication of an analyst's recommendation on that company, or promising a specific price target on that company's share price.