May 15, 2008
Merrill Reforms its Stock Rating System
Merrill announced a new system for rating stocks that requires its analysts to assign "underperform" ratings to 20% of the stock they cover and "buy" ratings to no more than 70%. Even after the Global Analysts' Settlement that mandated industry reforms to improve research, analysts remain reluctant to advise investors to sell. According to Bloomberg, only about 5% of all stock recommendations today are "sell." NYTimes, Merrill Tries to Temper the Pollyannas in Its Ranks.
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