52 Case Studies in Business Ethics and Corporate Governance
Securities Analyst Issues
Securities analysts employed by investment banks offer research and make “sell,” “buy” or “hold” recom-
mendations for the use of their sales staffs and their clients. These recommendations are widely circulated
and are relied upon by investor community throughout the markets. Analyst support was crucial to Enron
because it required constant infusions of funding from the fi nancial markets. On 29 November 2001, after
Enron’s stock crashed by more than 99% and after rating agencies downgraded its debt to “junk bond”
status, only 2 of 11 major fi rm analysts made its stock a “sell” rating. This performance added to worry
that were raised in Y2K in the wake of the ...