The Security and Exchanges Commission meant to protect investors when it issued the final version of its "Selective Disclosure and Insider Trading" rule on Aug. 10, but banking analysts say it is already having the opposite effect.

Eric E. Rothmann, an analyst at First Security Van Kasper in San Francisco, said that banks have released less information and have replaced in-person question-and-answer sessions with conference calls and Webcasts. Among publicly traded companies affected by the rule, "banks have taken the most conservative reaction," he said.

The SEC said it issued the rule because of concerns about the selective disclosure of confidential information by stock issuers. "Where this has happened," the regulator said in a statement, "those who were privy to the information beforehand were able to make a profit or avoid a loss at the expense of those kept in the dark."

But analysts say the move was misguided. Mr. Rothmann argued that analyst conversations with executives should be encouraged rather than discouraged, because they allow analysts to deliver better information to investors.

Analysts said they fear that, in releasing the information directly to the investing public, banks refrain from touching sensitive issues, leaving the analysts to interpret statements without one-to-one guidance.

Frank J. Barkocy, executive vice president and director of research at Keefe Managers Inc., said investors rely on analyst interpretation. If they are forced to rely on rumors and chat room chatter, it could create volatility, he said.

In a statement, Mr. Rothmann wrote that currently, "if a stock performs extremely well or poorly, many run to see what was posted in the chat rooms," which has an effect "akin to yelling 'Fire' in a dark theater."

Derek Green, vice president and manager of investor relations at National City Corp. in Cleveland, said his bank still considers one-to-one talks with analysts as important as before, though its executives might be more cautious of what they say.

Mr. Barkocy said one consequence of the new rule is that it forces analysts to try to talk to "a broader range of management below the executive level and piece together information to draw conclusions." For now, he said, the rule forces analysts to conduct more "hard-core fundamentals research."

Mr. Green and Mr. Barkocy said they believe the awkwardness will ease as banks get used to the rule.


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