Writing Securities Research (PDF)

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.