Analysts on TV, Radio Face New Disclosure Rule

Securities analysts appearing on television and radio will have to disclose any financial interest in the stocks on which they comment beginning Tuesday, when new regulations take effect.

The rules were announced by the Securities and Exchange Commission on May 8, with a 60-day grace period.

The disclosure requirements are part of a broad effort by regulators to curb potential conflicts of interest by Wall Street analysts. The conflicts were spotlighted by recent revelations that Internet analysts at Merrill Lynch & Co. (ticker symbol: MER) publicly touted stocks they had slammed privately as “junk.”

The SEC rules are designed to limit how and when analysts issue opinions on stocks, restrict their personal investing activities and force investment banks and their analysts to disclose more about their ties to companies they research.

Money managers and industry financial analysts are widely used as guest commentators on business talk shows, but at least one broadcaster downplayed the effect of the new rules.

New Jersey-based CNBC has had guidelines for financial professionals appearing on the cable business network for several years, said Patti Domm, a senior news editor.

Among other requirements, she said, business professionals appearing on CNBC are asked to ensure that their personal financial activity is consistent with the opinions they express on the air and to disclose any investment banking relationship between their firm and the company they are discussing. A guest’s interest in a stock may be disclosed by either an on-screen graphic or pointed out by the anchor, Domm said.

“Now that it’s a rule, we’ll make even more effort to graphically represent [the guest’s interest] or disclose it during the interview,” she said.

Rival CNNfn will be in complete compliance with the new regulations, a representative said.