Should the SEC require analysts/brokers/fund managers to publically disclose their holdings on a % basis?

Question

Brokers, analysts, fund managers - they all tell us where we should invest our money. Would a requirement that they report their holdings by percentage help reduce fraud, pump-and-dump, bad advice, etc... Example: if their total investment holding are $2000, they should not have to report that they have $1000 in IBM, $1000 in TXT. They would report 50% in IBM, 50% in TXT. They would not report that the total is $2000.

Answer 1

This is not a workable proposition. Analysts are required to disclose the fact that they are direct OR beneficial owners of the security they cover. What it means is that an analyst is required to say that he is a beneficial owner of the security if his/her family member owns it. Since the analyst may have no idea what the total wealth of that family member is, he/she would not be able to comply.

As to fund managers, good ones often require their key employees to stop investing outside the company's funds as a condition of employment.

Answer 2

Generally, whenever an analyst publicly comments, he/she does disclose his relationship with the company he is talking about. CNBC and other financial channels have a policy that the moderator has to ask the question, and the type of relationship.

SEC got around the rule you are talking about by insisting on a "chinese curtain" between analyst group and trading group. I don't think that is enough, but I believe we don't need any more government in our lives; plus, the vast majority of analysts are doing an honest day's work.

In any case you have a good point, and maybe you shoud write to your senator and congressman.

Answer 3

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