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Securities Analyst Recommendations

Sept. 6, 2011

Analyst recommendations can have a significant effect on a company’s stock price, especially when the recommendations are widely disseminated through television appearances or other electronic and print media.  The SEC receives a number of complaints about analysts who recommend buying a stock in a company from investors who believe the analyst has a financial stake in the company or some other conflict of interest.

Analysts are generally required to disclose possible conflicts of interest when 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 also must disclose in a research report if their firms make a market in the security or have an investment banking relationship with the company.

The SEC cautions investors not to rely solely on any analyst recommendation.  Instead, investors need to ask questions about their investments and know what they're buying and why.  For more information and tips on what questions to ask, please read our online brochure entitled Analyzing Analyst Recommendations.





We have provided this information as a service to investors.  It is neither a legal interpretation nor a statement of SEC policy.  If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.



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