The Japan Securities Dealers Association (JSDA) is drafting rules to combat the “Sandy Weill writes my investment recommendations” problem in investment banking, which first surfaced in serious form at Citigroup in the United States.
JSDA is reported to be revising its rules and regulations for member-firms to prevent research analysts from accompanying investment bankers in meetings with corporate clients to market equity or bond issues; to meetings with potential investors to market new issues; from writing reports on a company whose board they sit as an outside director; and from acceding to requests from companies to write reports on particular companies without stating explicitly that it was written at the request of the firm rather than on their own initiative.
The new rules, which are expected to come into force in May 2004, will be enforced by fines and public admonitions.