Merrill Lynch's compliance process is rigorous and designed to prevent the kind of conflict of interest falsely alleged. Whatever the outcome of the case, the issue has become a hot one in the US, with Congress to hold hearings on analyst conflict of interest in June. The Blodget case may centre on conflict of interest - but analysts on both sides of the Atlantic are coming under fire for their patchy success rate when it comes to forecasting share prices. In particular, analysts face criticism for sticking doggedly to recommendations to buy or hold shares whose price is falling. One example is that of US technology firm Rhythms NetConnections.
Some investors also question the methodology used by some analysts to make recommendations.
CSFB, for example, has recommended 500 technology stocks since 2 February 1999. Several other banks have a similarly patchy track record. Salomon Smith Barney has recommended 243 internet stocks since April 1999. Prices have only increased for 68 of them, according to the same website. Glory days What is becoming clear is that the glory days of the analyst appear to be nearing their end.