WASHINGTON (April 19, 2002) –The North American Securities Administrators Association (NASAA) today called on the Securities and Exchange Commission and the National Association of Securities Dealers (NASD) to prohibit stock analysts from appearing at “road shows” to promote new stock offerings by the investment banks that employ them.

NASAA’s proposal came in response to a rule under consideration by the SEC (Release No. 34-45526) designed to strengthen the independence of stock analysts in the wake of the dot.com and Enron debacles.

“The objective of this rule is to create an even playing field for investors, many of whom look to stock analysts employed by investment banks for advice and analysis,” said NASAA President Joseph Borg. “Analysts shouldn`t be on the road promoting the same stocks they claim to be objectively examining in their reports.”

“Clearly, an analyst`s value to a firm is in large part determined by how well he or she performs in these promotional activities, and it is disingenuous to conclude that (the analyst`s) compensation is not affected as well,” NASAA wrote in a comment letter to the SEC.

While expressing broad support, NASAA’s comment letter also urged the SEC t

Forbid so-called “booster shots.” Booster shots are analyst reports timed to raise the value of company stock at the end of a company’s “lock-up” period, during which company executives are barred from selling stock issued to them before the company was taken public;

Call on the NASD and New York Stock Exchange to adopt strong anti-retaliation rules that would provide severe penalties for attempts to intimidate or punish an analyst for producing negative research reports;

Apply industry-wide the policy of some firms that ban analysts from trading in the sectors they cover; and

Contemplate a ban on the coexistence of analyst research and investment banking within a firm if lesser remedies fail.

“While we generally are in favor of the proposed rule – and commend the NASD and NYSE for their hard work – we also think the rule could and should do more in several important areas,” Borg said.