NASD Backs Disclosure Guidelines for Analysts

The National Assn. of Securities Dealers endorsed a plan to make brokerage analysts disclose possible conflicts of interest, such as their ownership of stocks they recommend and their firms’ investment-banking ties to companies reviewed by the analysts, NASD board members said Wednesday.

The NASD rule proposal still needs approval from the Securities and Exchange Commission. SEC Chairman Harvey Pitt has said he favors letting the NASD and the New York Stock Exchange, not the government, make rules to protect investors from analyst reports aimed more at winning business for a firm than giving clients objective advice.

Congress has debated whether to take stronger steps, such as banning analysts’ ownership of stocks they review. Merrill Lynch & Co., Credit Suisse First Boston and other firms have voluntarily taken that step. The NASD vote improves chances that final rules will focus on disclosure of conflicts rather than federal restrictions on stock holdings or investment banking.

The NASD plan “has the potential to help investors because better disclosure is needed,” said Barbara Roper of the Consumer Federation of America, an investor advocacy group.