Details

Writing Securities Research

A Best Practice Guide
2. Aufl.

von: Jeremy Bolland
48,99 €
Verlag:	Wiley
Format:	PDF
Veröffentl.:	01.12.2010
ISBN/EAN:	9780470826959
Sprache:	englisch
Anzahl Seiten:	192

In den Warenkorb

Als Gutschein

DRM-geschütztes eBook, Sie benötigen z.B. Adobe Digital Editions und eine Adobe ID zum Lesen.

Beschreibungen

Titelbeschreibung

The book highlights the major risks that securities analysts (and other securities professionals) face. The various laws, rules and regulations that securities analysts are subject to are broadly split into three categories: research-specific rules and regulations; market-wide laws; and society-wide laws and customs. The risks that arise out of these various levels of rules and regulations, insofar as research analysts and other securities professionals are concerned, include conflicts of interest, fair distribution/front-running of research, insider trading, spreading of rumours, not highlighting investment risks (including corporate governance issues), as well as defamation and copyright issues. We see that if an analyst puts a company in play, a regulator would instantly assume that the analyst is trading on inside information (especially if the information turns out to be true) or is spreading a rumour (especially if it turns out to be false). However, we also see that there is a third option – that the analyst might just have come to his or her conclusion through some good research based on verifiable facts and reasonable assumptions. Definitions of research from around the world are examined. After all, research is generally defined by its content, not by the author's job description. As such, non-Research securities professionals such as brokers and marketers of research as well as investors, journalists and even bloggers and twitterers need to understand what constitutes “research” so that they don't fall into the regulators' purview. As regards the risks to investment views that analysts need to highlight to their investors, the book not only examines economic and financial risks but also examines corporate governance issues such as executive compensation, equal treatment of shareholders, related-party transactions and risk management. To demonstrate the risks that analysts, securities professionals and investors face, the book draws on many cases and examples from around the world, including many from the global financial crisis of 2007-2009. From these cases we see how penalties for those involved in the securities markets have become more serious over the years. They range from fines to imprisonment, and even to execution in some markets. To give a light-hearted angle, many of these cases are accompanied by “Alex” cartoons.

Inhaltsverzeichnis

Foreword xv Preface xix Summary points and recommendations xix Background xxii Background to the second edition xxii Background to the first edition xxvi The changing regulatory environment xxvii Introduction xxx More education rather than more regulation xxx The need to identify investment risk xxxi Target readership xxxiii Commercial benefits to compliance xxxiii Local differences and specific circumstances xxxiv Summary xxxiv Case studies and examples xxxv Themes xxxvii Research coverage xxxvii Sourcing information xxxviii Reasonable basis for recommendations and risk assessment xxxix Conflicts of interest xl Writing in general xli Acknowledgments xlv Abbreviations Used in This Book xlvii Chapter 1: Principles of Research 1 Key points 2 Definition and supervision of research 2 Supervision and control of research 2 Marketing research to the U.S. by foreign broker-dealers 3 Stock-picking tips 8 Continuing education 9 Cheating in tests 10 The realm of research 11 Ambit of securities regulations (bonds) 12 Ambit of securities research regulations (equity and credit research analysts) 13 Ambit of securities regulations (swaps and other derivatives) 16 Ambit of securities research regulations (marketers of research, including hedge fund research) 19 Ambit of securities research regulations (analysts as experts on sales desks) 20 Ambit of securities research regulations (stock-tipping bloggers) 21 Ambit of securities research regulations (media commentators) 23 Minimizing approval and publishing risks 26 Honesty and fair treatment of clients 28 Common securities-related violations cited by the SEC and FINRA of the U.S. 28 Regulations tightening up around the world (Hong Kong) 29 Regulations tightening up around the world (China) 31 Regulations tightening up around the world (Japan) 32 Front-running and selective distribution of research 35 Front-running and selective distribution of research (huddles) 35 Front-running of research 36 Selective distribution of research 37 Selective distribution of research (fact-checking) 39 Selective distribution of research (greater conviction of view) 39 Insider dealing and selective disclosure 41 Use/dissemination of price-sensitive information (general) 44 Use/dissemination of price-sensitive information (U.S.) 47 Use/dissemination of price-sensitive information (U.K.) 48 Use/dissemination of price-sensitive information (Hong Kong) 50 Use/dissemination of price-sensitive information (serial insider trading) 53 Use/dissemination of price-sensitive information (pillow talk) 54 Use/dissemination of price-sensitive information (economists) 56 Specific requests and proprietary information 58 Definition of publishing 59 Unfair portrayal of past recommendations 60 Performance of past recommendations 60 Conflicts of interest and disclosure of interests 62 Catering to investors with specific investment criteria 62 Shari’ah law implications for securities research analysts (stocks) 64 Shari’ah law implications for securities research analysts (bonds) 65 The virtues of a vice portfolio 67 Analyst surveys 67 Playing the voting “game” 68 Sourcing information 71 Acknowledging the source 71 Gathering confidential information 72 Receiving confidential information 76 Rumors, speculation and M&A 79 Identifying M&A candidates (putting companies into play) 81 Short selling by hedge funds (abusive rumor-mongering) 84 Defamation—libel and slander 88 Defamation 89 Intellectual property—copyright and plagiarism 91 Intellectual property 91 Research integrity and consistency 95 The problem 95 Disgruntled clients 95 The principles 96 . . . be consistent or explain apparent inconsistencies 97 Sector/country weightings and universes 100 Consistency of views 101 Top picks (research requirements) 102 Consistency of views 104 Technical analysis 105 Useful qualifications (technical analysis) 106 Coverage universe—initiations, terminations and transfers 106 Accountability principles 106 Initiation of coverage 107 Transfer or re-initiation of coverage 107 Co-authorship liability 108 Termination of coverage 109 “Under review” 110 Publishing new research 111 No recommendation? 111 No recommendations 114 Chapter 2: Reasonable Basis, Valuations and Risk 119 Key points 120 Consistency of recommendations 121 Explanation for inconsistencies 121 Following the market 122 Valuation support 122 Forensic analysis of accounts 122 Channel-stuffi ng and other activities 123 Cross-industry antitrust issues 124 Disclosures and notes 126 Pro-forma accounting and use of selective data 128 Reasonableness of valuations 128 Highlight valuation changes 129 The appropriate valuation methodology 129 Unrealistic expectations or questionable bases for valuation 130 Excessive valuations 132 Highlighting risks and volatility 133 Appropriateness of sell ratings 134 Short-selling by hedge funds (pushing the envelope?) 135 Management’s reaction to negative research (legal action) 137 Management’s reaction to negative research (restricting information) 138 Mis-selling and not highlighting risks 139 Highlighting investment risks (credit crisis of 2007/08, U.S.) 139 Highlighting investment risks (credit crisis of 2007/08, global) 142 Highlighting investment risks (general) 144 Evaluating risks and catalysts 146 Catalysts and consensus 147 Market liquidity and contagion risks 147 Foreign exchange and interest rate risks 147 Currency risks 148 Earnings risks 150 Brand theft risk 151 Brand theft 151 Brand usurping 152 Cashflow and liquidity risks 153 Valuation risks 153 Modeling and miscalculation risks 154 Modeling risks 155 Mispricing risks 156 Information risk 157 M&A risks 158 Corporate governance risks 159 Gauging corporate governance risks 159 Social responsibility 161 Corporate governance (social responsibility—rankings) 161 Durability of brand names 163 Corporate governance (social responsibility—the mass-consumer market) 164 Corporate governance (social responsibility—corporate governance excellence) 165 Executive remuneration 167 Corporate governance (executive remuneration) 168 Corporate governance (executive remuneration—disclosures) 172 Executive insider trading 174 Corporate governance (executive insider trading) 175 Equal treatment of shareholders 176 Corporate governance (equal treatment of shareholders) 177 Corporate governance (related-party transactions) 179 Corporate governance (equal treatment of shareholders—related-party transactions) 181 Corporate governance (vote manipulation) 182 Corporate governance (independent non-executive directors) 184 National interest 184 Corporate governance (national interest) 184 Corporate governance (national interest—strategic industries) 187 Corporate governance (national interest—sovereign wealth funds) 189 Risk management 189 Corporate governance (false statements by issuers) 190 Corporate governance (risk management and rogue traders) 191 Corporate governance (transparency of operations) 196 Ponzi schemes 197 Corporate governance (risk management and money-laundering, bribery and corruption) 199 Credit rating risks 201 Analyzing risk (credit rating agencies) 201 Due diligence by investment bankers 203 Due diligence (failures) 204 Chapter 3: Independence of Research and Conflicts of Interest 209 Key points 210 Summary 210 Separating research and banking 211 Conflicts of interest (global settlements) 212 Conflicts of interest (collateralized debt obligations) 214 Conflicts of interest (auction-rate securities) 216 Managing contacts between analysts and bankers 217 Disclosures of interests and relationships 219 Conflicts of interest (private trading contrary to recommendations) 220 Analyst certification 221 Conflicts of interest (disclosures) 222 Writing research on banking clients 223 Conflicts of interest (watch lists) 225 Confl icts of interest (managing apparent conflicts) 226 “Pre-deal” research 230 Conflicts of interest (pre-deal research) 231 Influencing of analysts by issuers 234 Conflicts of interest (bribes) 234 Conflicts of interest (favors) 235 Conflicts of interest (issuers guiding analysts) 236 Conflicts of interest (employment) 237 Independent research firms 238 Alleged conflicts of interest (independent research firms) 239 Paying for sell-side research 242 Transparency in paying for research (inappropriate payments) 245 Paying for credit ratings 246 Chapter 4: Non-research: E-mails, Blogs and Internal Communications 251 Key points 252 Approval of e-mail and media appearances 253 Objective commentary on non-rated companies 254 E-mails 256 E-mails as research 257 Retention of e-mails 259 “Internal Use Only” 261 Chapter 5: General Writing, Editing and Publishing Considerations 263 Key points 264 Introduction 264 Getting the message across 265 Headlines and covers 265 Standards of taste 266 Bullets, key points and executive summaries 267 Publishing and distribution 267 Writing the text 268 Writing rules 268 Use the right word 269 Vocabulary for attributing forward-looking comments (using “will”) 269 Measurements and direction/degree of movement 271 Vocabulary for describing movement and performance 272 Words to avoid or use carefully 273 Bullshit Bingo (vocabulary and phrases) 274 Clarity of communication 275 Clarity, consistency, conformity and continuity 276 Be consistent or explain inconsistencies 277 Editorial departments and style guides 277 Translations into different languages 278 Mistranslations 278 Publishing independent yet integrated reports 279 Sensitivity to politics and religion 280 Sensitivity to politics and religion 280 Correcting errors 281 Courses of corrective action 281 Materiality of the error 282 Publishing of out-of-date story 282 Retractions 283 Helping the reader 286 Index 287

Autorenportrait

Since writing the first edition of Writing Securities Research: A Best Practice Guide, Jeremy Bolland has been invited regularly to address CFA societies on the risks that their members face as chartered financial analysts. He has also addressed audiences of regulators, lawyers, and law students on the subject. Jeremy has over 25 years of experience in the world of investments, and has worked in London, Tokyo, and Hong Kong. For the past 16 years he has worked in securities research at global investment banks, including a five-year stint at Morgan Stanley, five years as a director at ING/ING Barings, and most recently five years at HSBC where his final role was Head of Training for Global Research. Jeremy has been a qualified supervisory analyst (SA) since 1997, and as such is authorized to approve securities research for U.S. distribution. Before entering the securities industry, Jeremy was marketing director and company secretary for a property development company that undertook industrial and commercial projects throughout the U.K. as tax-shelter investments for corporates and high net worth individuals. Jeremy is also the author of A Guide to Investment in Enterprise Zones (Longman, 1988, 2nd ed. 1990). Jeremy Bolland grew up in Malaysia, holds an honors degree in Classics from King's College, London University, and studied Chinese at SOAS and Beijing Normal University.

Back cover copy

WRITING SECURITIES RESEARCH A Best Practice Guide Writing Securities Research is a comprehensive guide for securities research analysts around the world. Analysts who want to write research that is clear, concise and actionable should carefully read and digest the contents of this book. I would say that it should also be compulsory reading for research managers,compliance officers, editors, securities lawyers, securities regulators and students of investment and finance. Jeremy Bolland's book helps to equip analysts with many useful tools to help them achieve securities research success. Dr. Mark Mobius Executive Chairman of Templeton Asset Management Ltd. Jeremy has made a major contribution by incorporating and explaining ethical principles in the writing and dissemination of investment research. He uses real-life examples as illustration which enhances the reader's understanding. This is a practical book for analysts, academics, regulators and students of finance. Lee Kha Hoon Asia Pacific Head of Standards and Financial Market Integrity, CFA Institute For every research analyst, research manager, research counsel and supervisory analyst, a large proportion of his or her role involves the circumnavigation of a dense body of global, often conflicting, regulation. In training sessions, many analysts ask: "But how does this apply to me? Why do the US rules apply if I'm based in Hong Kong? How do I recognize price-sensitive information?" Jeremy has done what no one thought of doing before: he has pulled together the rules and the examples where firms and individuals fell foul of those rules, distilled into a best-practice guide that can be used by the green and the seasoned in any jurisdiction. Emma Pegler Global Head of Research Control, HSBC At a time when the regulatory landscape in the financial world is becoming increasingly complex, it is refreshing to read Jeremy's book which identifies clearly and concisely the difficult regulatory, legal and ethical issues that research analysts must navigate around the world when producing research for their clients. It is the comprehensive nature of Jeremy's book and the fact that he provides practical solutions to problems that make it such a useful tool for analysts, institutions, regulators and professional advisers alike. Alan Linning Partner, Sidley Austin, and Former Head of Enforcement, Hong Kong Securities and Futures Commission Recent market events have heralded a new era of scrutiny, with consequences for the world within which securities analysts operate. At the same time, the regulatory environment has become increasingly sophisticated with complex, often competing, global requirements. Jeremy provides comprehensive guidance through all aspects of preparing securities research. The practical, focused case studies will also give real value to anyone who wants to fully appreciate the potential pitfalls that can and do arise. Whether you're a lawyer or a regulator just starting out in this field, or you have been in it for many years, Jeremy's research and guidance will offer you real insight. Elizabeth Clay Solicitor, White & Case LLP Securities research in developing markets, especially those in Asia, requires a practical hands-on approach. In markets where transparency is not a given, Jeremy gives analysts the intellectual framework necessary for making sound, honest judgments about any company. These aren't the lessons they teach you in MBA programs. They're the real deal! Steve Vickers President and CEO of FTI-International Risk