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Show c2 The Salt Lake Tribune BUSINESS CONSUMER CORNER Friday, May CENTERPIECE And Seldom Is Heard a Discouraging Word Manystock analyysts workin companieswith interest in corporationstheyfollow Makersof Fake Viagra Agree to Give Up Assets WASHINGTON — The makers of a fake version ofthe impotence drug Viagra have agreedtosettle government charges that they falsely advertisedtheeffectiveness oftheir products Under an agreement with the Federal Trade Commission, American Urological Corp., owned by David Brady, andseveral affiliated companies must give up more than $2 million in frozen assets and are barred from making any claims about their products without the support of scientific evidence. According to the commission Bradyandhis businesses marketed such products as “Vaegra,” “Testosterone-21,” and “Urophil” as treatments for impotence. The companies falsely advertised that their products had beendeveloped by legitimate medical firms and hadbeenprovedeffectivein elimi nating impotence in up to 94 percent of men. GANNETT NEWS SERVICE They just don’t bash stocks the way they used to In fact, they rarelydo at all Stock market analysts, who in the early 1980s routinely blasted companiesas“ineffi- cient” or “bloated” and urged investors to sel “losers” often, today rarely say an unpleasant word about corporate Ameri Po alargeextent, some say, they've become cheerleaders for the market and individual corporations. They doggedly urge people to buy stocks and almost never publicly advise clients to sell a stock, even if they're doing so privately Thereason, according to critics: After years of consolidation in the financial industry many analysts work for investment banks broke andother firms that have lucra tive business relationships with the companies they cover The result, according to critics: To keepclients happy and securemillions of dollars in present or prospectiveservicefees, analysts continually trumpet stocks — or at least avoid bad-mouthing them Ken Janke, president andchief executive of the 750,000-member National Association of Investors Corp., said one-sided research robs individual investors of the independent ad- Auto Insurance Rates Drop, May KeepFalling vice they need to makeinformed investing decisions. ‘Analysts’ opinions have great influence over the market andinvestors,” said Janke. whose group helps its members form invest NEWYORK — Auto insurance rates fell 2.8 percent last year na tionwide — the first decline in 25 years — andcould fall further this year, an industry groupsaid TheInsurance InformationInsti. tutesaidthe drop reflectedgreater ment clubs and gives tips on researching stocks, “There are still an awful lot of inves: tors out there who take advice from other people ratherthando their own research Wall Street’s niceties — and potential con flicts of interest — haven't escapedthe atten tion of the Securities and Exchange Commis: competition amonginsurers, more sion skilled drivers on the road safer vehicles and less tolerance for drunkendrivers. seminar, issued “an early warning signal” to FAA Wants Black Boxes Updated More Quickly WASHINGTON — TheFederal Aviation Administration is calling for faster installation of bett flight recorders — the so-called black boxes — on Boeing 737 com mercial jets The FAA proposal omesin the wakeof a National Transportation Safety Boardfinding that a jamin rudder-control valve caused the 1994 crash of USAir Flight near Pittsburgh, killing all 1 people on board TIM DAHLE NISSAN SOUTH TOWNE Is Proud to AnnounceNephi Astin with 20 Years Nissan ExperiencehasTransferred to the Auto Mall in Sandy SEC Chairman ArthurLevitt, speaking late Miller As: In one of the most publicized conflict of interest cases, he said he was fired from Janney “Analy opinions have great influence over the market and wonder how many investors realize thepro. fessional and financial pressures many ana. lysts face to dispense recommendations that ire morein a company’s interest rather than public's interest Levitt said heis troubled by thefact that year — hesaidhewaslet goto avoid a lawsuit Roffman later sued Janney Scott and with the various self-regulating agencies,” Le ‘Trump. Hewas paid $750,000 by Janney Scott andan undisclosed amount by Trump Carl Gordon, an analyst at OrbiMed Advi sors in New York, said the ‘90s bull market * he said. “Youbetter not say anything negative or unfavorable about a company or yourisk losing themas aclient vitt said Some observers take a morepositiveview. The Street is rife with conflicts of inter- has not produced manylosers in the stock market, so analysts are understandably more He added most analysts cover companies they personally conside good investments, lesseningcriticism. ‘These guys aren't doing anything wrong,” he said. “Investors just conference calls or public industry conferences. Companies couldalso withholdinside information, limiting an analyst's ability to do his or her job. need to understand how the system works ‘Thesubject is a touchy oneon Wall Street Fewanalysts wantedto be quotedontherec- ord for this article. "I'mafraid to get involved inthis area,” said one New York analyst who didn't want his name used. inflammatory area “It could be an graces to keepthe information flowing,” should be a Chinesewall between investment banking andresearch, Roffmansaid the analysts arepaidis alsopartly behindthe spateof sunnyresearch reports. Analysts oncewere paidasalary and bonus clients. Conflict of interest “is a legitimate problem based on trading revenues generated bytheir recommendations. Now, they earn most of ir income from the amount of money they nerate for their company throughinvestment bankinginitial public offerings, second said Philip Orlando, chief it Value Line Asset Man- agement. “Someanalysts can be unduly bull ary issues, debt offerings and mergers andacquisitions. If an analyst says negative things about a client or a prospectiveclient, theclient might I don’t think the problemis as worrisome as [Levitt] believes it is," countered Lawrence Cohn, director of research at investment bank Ryan, Beck & Co. in Livingston, N.J., though 3ut I don't Roffman, president of Or- lando said, adding in the worst case analysts could lose their jobs or be sued, “There analysts concedethat conflicts of interest ex ist However, overall, they say they areableto remain objective andfair while serving two masters —the investing communityandtheir Marvin Magnet members with access to Merit’s disposable medical products. It represents $10 million in annual sales to Merit a JP Realty Inc. ofSalt LakeCity reported net incomefor thefirst quarter ending March 31 of $6.8 million, an increase of 3 percent over thefirst quarter of 1998, Rev- enuesfor the quarter increased 35 percent to nearly $33 million. JP Realty ownsor hasaninterestin 50 properties, including 18 regional malls, Oo Anesta Corp., Salt Lake City, hassignedanexclusive agreement with Swedish Orphan AB for the marketing, sales and distribution of its products, including Actiq, in Denm Finland, Iceland, Norway and Sweden. Actiq is a product approved in the United States to treat breakthrough cancer pain. Oo You need to stay in management's good Still, privately and publicly, most market in the industry,” vides medical facilities that are Spokespeoplefor Janney Scott and Trump Hotels & Casino Resorts did not return calls for comment The risks of bearish reports run high for analysts. Roffman said analysts who bad-mouth a companycouldfind themselves banned from bullish ish. I sometimes wonder how objective a par ticular research report is I worry that investors hear fromtoo many Roffman said Trump faxed a letter to the company threatening a lawsuit if Roffman wasn't fired or if he didn’t receive a public Buys” account for about 70 percent Tamgoingto discuss[conflicts ofinterest] companies he said are overly bullish because of behind-the-scenes relationships with cor porations Atlantic City, N.J.. would go bankrupt just monthsafter its grand opening. apology. He wouldn't apologize and despite the accuracy of his prediction — TrumpTaj Mahal declared bankruptcy in October that investmentoffi analysts who — whether theyrealizeit or not Scott in 1990after issuing a re- port in Mayof that year that said Donald Trump's TrumpTaj Mahal hotel and casino in Ken Janke National Association of Investors in April at a Securities Industry Association — may bejust abit too eager to report what looks like afrogis really a prince,” he said. “1 Montgomery investors. There are still an awful lot of investors out there who take advice from other people rather than do their own research.” Merit Medical Systems Inc. of South Jordan hassigned a threeyear agreement with the Mid-Atlantic Group Network of Shared Services Inc. (Magnet) in Mechaniesburg, Pa. The agreement pro- bypass his company when it’s looking for in vestment banking services. costing his em ployer and, potentially, himself millions of Roffman dollars. World Internetworks tion agreement with Digital River Inc. Underthe agreement, the Minneapolis-based Digital River will provide more than 100,000 com puter software titles and useofits electronicsoftwaredelivery so World Internetworks di tors can provide the programs to its clients. Oo lomega Corp. of Roy announced the release of the internal ATAPI Zip 250MB drive, the first internal drive of this typeto be sold in stores. The drive fits into a a possible sign that unduepressure is being and connects to an internal power supply. It is used with disks manufactured by lomega YOU KNOW THAT LITTLE VOICE Sell recommendations make up about 1.4 percent of analyst recommendations, accord ing to First Call Corp., which surveys analysts 6.0 % IN- YOUR HEAD YOU TO TELLING BUY A JAGUAR? PURCHASE REFINANCE HOME EQuity/s2sitv Pe ee Tra 1-800-HOME-LOA 6 180) HOME: LOAN AreYoua Residential Project Manager? Ifyou can build great homes, Hamlet can buildyoua great career. Hamlet Homes is interested in you joining our team of building professionals. POUR Gtaue elegance with a bit of lavishn Black Enterprise Bee ea mang erRice Ra eo eeat lel) else Meos “Engineering wizardry” USA TODAY Hamlet HomeClosings ne 1996195 ee Hh ! The Hamlet Companies, attention John Aldous, 470 East ; so : $90 South, Suite 200, Salt LakeCity, Utah 84107, Fax 401-281-2224, or e-mail john@iew.com. Look us up at www.hamlethomes at HAMLET === COMPANIES We Burp Cancers For Our Peorie @& con. ventional personal computer drive analysts rarely issue “sell"’ recommendations applied Inc., Orem, signed a two-vear distribu- y nrinted few year ify printed a lew years 390 in The Salt Lake Tribune? It's available to you now vore information, e-mail tribaccess @sltrib.com |
