INITIAL PUBLIC OUTRAGE It's open season on stock analysts. Merrill Lynch last week prohibited its analysts from owning equity in companies they cover, and the SEC recently issued an alert, cautioning investors that investment banks' brokerage interests potentially compromise their researchers' independence. Investars.com an information service, illustrates that potential: its models show that in the past four years stocks bought and sold based on analyst recommendations have dropped 52.4% when analysts' firms underwrote the IPO and 4.6% when they didn't.
Investment bank IPO return Non-IPO return
CSFB -52.78% 9.87% AG Edwards -0.75% 1.59% Salomon SB -43.04% -0.27%...