Brokers slip clients tips

Some brokers are "tipping" privileged clients about private analyst recommendations to buy or sell stocks before that advice is made public. Those tips are leading to "abnormal trading volumes" on associated stocks before recommendations are made public, new research shows. A leading market research group says it has examined publicly available data containing broker identifications for roughly 3800 analyst recommendations on 338 listed stocks. The Capital Markets Co-operative Research Centre says it has looked at the volume of trades made by certain brokers before and after analyst recommendations were made public, and found "clear spikes" in trading volumes by some brokers before the analyst reports were released to the public. CMCRC chief executive Michael Aitken said while the behaviour might not be illegal, it gave an advantage to those "in the know". Gareth Hutchens

Some brokers are "tipping" privileged clients about private analyst recommendations to buy or sell stocks before that advice is made public. Those tips are leading to "abnormal trading volumes" on associated stocks before recommendations are made public, new research shows. A leading market research group says it has examined publicly available data containing broker identifications for roughly 3800 analyst recommendations on 338 listed stocks. The Capital Markets Co-operative Research Centre says it has looked at the volume of trades made by certain brokers before and after analyst recommendations were made public, and found "clear spikes" in trading volumes by some brokers before the analyst reports were released to the public. CMCRC chief executive Michael Aitken said while the behaviour might not be illegal, it gave an advantage to those "in the know".

Related Articles