4 ms·
He can afford college? In seriousness though: are analysts allowed to have an interest in stocks they're publishing analysis for? It seems like a fine line bet
by mauvehaus 3y ago
He can afford college?
In seriousness though: are analysts allowed to have an interest in stocks they're publishing analysis for? It seems like a fine line between creating an obvious conflict of interest (see: TFA perhaps on a more subtle level) and wanting them to have skin in the game so they're incentivized to provide useful analysis (rather than YOLO: stock goes up/down and I don't care because it's other people's money on the line).
In general, it seems like a hard problem to compensate an analyst without either creating one of the above scenarios or generally setting up a scenario where they'd be better off trading for themselves on the basis of their analysis rather than providing a service to other investors.
- ghaff 3y agoFor both stock analysts and other types of analysts like IT industry analysts, it depends on the firm as far as I know and the rules may be more or less strict depending upon how involved they, or their fund, are with the given company. Generally, rules lean towards avoiding both conflicts of interest and the appearance of conflicts of interest.
- seadan83 3y agoThe difference, an analyst states if they have a long or short holding and if they intend to buy or sell in the future. The scammer does not, that is the key difference.
- _sword 3y agoAt virtually all banks, equities analysts are banned from trading in their coverage. Banned as in, if you, your spouse, your dependents, etc. have an interest you didn't proactively disclose and dispense with you're fired on the spot. FINRA regulation states that registered equities analysts (i.e. the ones working at banks) at a minimum cannot trade against their ratings [0]. At most / all banks there are further restrictions that ban trading in coverage. [0] https://www.finra.org/rules-guidance/rulebooks/finra-rules/2241?rbid=2403&element_id=11946 https://www.finra.org/rules-guidance/rulebooks/finra-rules/2...