SEC Broadens Its Ban on Analysts’ Marketing Role

The Securities and Exchange Commission on Monday approved a blanket ban prohibiting brokerage analysts from taking part in “road shows” that pitch securities offerings to investors.

Wall Street’s 10 largest investment banks have been subject to such a ban since 2003, when the firms settled regulators’ allegations that some of their analysts publicly praised stocks of investment banking clients while privately panning the companies.

The industrywide ban, which had been requested by the NASD and the New York Stock Exchange, will govern analysts and investment bankers at all brokerages. The rules will take effect in about 45 days.

Besides barring analysts from appearing in securities- offering road shows, the rules forbid investment bankers from directing analysts at their firms to take part in sales or marketing efforts related to banking deals.

“Analysts can still talk to investors, but the idea is remove them from a ‘marketing’ process,” said James Brigagliano, an assistant director in the SEC’s market regulation division.

The NASD, formerly the National Assn. of Securities Dealers, said the industrywide ban should reduce pressure on analysts to give upbeat assessments of firms that are banking clients.