SEC Considers Rules to Protect Analysts

The Securities and Exchange Commission is weighing rules to tear apart the "web of dysfunctional relationships" that exists among companies, analysts, and investors, SEC Chairman Arthur Levitt Jr. said Monday.

Mr. Levitt told a group of more than 100 lawyers at an Association of the Bar of the City of New York meeting that the agency plans to propose a rule by yearend that, among other things, would clamp down on companies that share information with some analysts while excluding others.

He said the SEC also hopes to address concerns that analysts are sometimes silenced by their employers to protect the firms' investment banking relationships. That issue came to light recently with Bear, Stearns & Co.'s crackdown on analyst Sean Ryan, who made negative comments about First Union Corp. of Charlotte, N.C.

Mr. Levitt also said the SEC is reviewing comments on its recent pay-to-play proposal, which would prohibit investment advisers from making political contributions in exchange for government contracts to manage public funds. He said he expects a final rule soon. -- Cheryl Winokur

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