Congress Investigates Wall Street Analysts
DONNA KELLEY, CNN ANCHOR: A lot of us have cash in the stock market and now there are some big questions about whether you can trust Wall Street analysts when they say "buy." Lawmakers on Capitol Hill are looking into the matter this hour, and CNN's Tim O'Brien joins us now from Washington with more. Tim, good morning.</s>TIM O'BRIEN, CNN CORRESPONDENT: Hi, Donna. This hearing is just getting underway now as we speak. And as far as Washington hearings go, this one should be really quite fascinating. You know, careful investors research the companies they invest in and they check with the big financial service organizations, the big brokerage houses. And have you ever noticed all the recommendations seem to be either "buy" or "hold." They never seem to say "sell," or rarely will they say "sell." And while we've been buying and holding, we've lost, investors collectively have lost some $3.5 trillion. Where did it go? We don't know, but it's not in our pockets anymore. We follow the advice, but it's bad advice. Why is that? The major financial service organizations were invited to testify today. They're not here. Six of them declined. And they'd rather let the industry representatives speak for them; but we're told by one congressional source they wouldn't show up in a million years for what is certain to be a morning, and perhaps an afternoon of not very flattering testimony. The fundamental question, can you trust the Wall Street analysts, there will be some answers but it's -- you can't. Industry representatives are expected to present some voluntary code of ethics. Research departments should not report to investment banking units, analysts should be encouraged to issue both "buy" and "sell" ratings and should not trade against their own recommendations. The hearings are getting underway right now as we speak.</s>KELLEY: OK, Tim O'Brien, thanks very much and we'll be seeing you soon.