China Steps Up Clampdown on Analyst Rankings After Scandals
China Steps Up Clampdown on Analyst Rankings After Scandals
(Bloomberg) -- China’s securities industry is expanding a clampdown on popular analyst rankings, after last year shutting down the biggest annual competition citing unsavory behavior by some participants.
A notice circulated by the Securities Association of China on March 27 and obtained by Bloomberg News proposed banning brokerages from linking analyst compensation to investor rankings. The SAC, which is soliciting industry feedback, also said analysts should be banned from soliciting votes via WeChat, Weibo or email.
Officials last year took aim at the biggest research competition, the New Fortune rankings, amid rising questions about how analysts behaved in order to secure votes. Days after a video of staff from one brokerage raucously partying with a client went viral, many securities firms responded to regulatory pressure by pulling out of the contest.
“In recent years, some analysts took inappropriate actions in order to win the competition and that has greatly tarnished the industry’s image and public trust, and disturbed market norm,” the SAC notice said. An official from the SAC declined to comment.
New Fortune isn’t the only competition for analysts in a market where securing top rankings can mean a huge jump in pay. There are also contests like the Crystal Ball Competition run by Capital Week, and the Golden Bull.
The SAC didn’t propose banning research rankings outright. However, it recommended that analysts seeking to enter future competitions must register through their firm, which will then select those who are “compliant” and have “high ethical standards,” according to the notice.
To contact Bloomberg News staff for this story: Jun Luo in Shanghai at jluo6@bloomberg.net;Evelyn Yu in Shanghai at yyu263@bloomberg.net
To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net
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With assistance from Bloomberg