For this assignment, read “J.P. Morgan Tells Analysts to Warn of a Downgrade ” (click the link to access the article). Then answer the following questions using your own Word document:

• What is meant by “analysts’ independence”?
• When and how might analysts’ independence be compromised?
• What pressures do analysts face that might reduce their independence?
• Is maintaining a “buy” recommendation on a stock after its price has fallen evidence that an analysts’ independence is compromised?
• Do analysts who currently recommend investing in tech stocks and the broader stock market lack independence?
• What exactly does Peter Houghton’s memo say?
• Does the memo say that analysts should compromise their independence?
• How does the memo raise questions about analysts’ independence?
• Does it make any difference whether “analysts aren’t pressured to change recommendations, but only to make factual changes”?
• What are the “buy side” and “sell side”?
• Why might the “sell side” be unwilling to make “sell” recommendations on stocks?
• If the “buy side” has its own analysts, would the “buy side” ever look at “sell side” analysts’ reports?
• Why might “sell side” companies extend the “normal, common courtesy” of warning firms before they downgrade their stocks?
• Would you consider this good business practice?
• What is Mr. Barkocy’s “buy side” criticism of such practices? Why might the “sell side” ignore such criticism?
• Former SEC chairman, Arthur Levitt, criticized analysts in January this year in a speech in Philadelphia. Read the speech at: http://www.sec.gov/news/speech/spch457.htm. Levitt comments that a “sell” recommendation from an analyst is as common as a Philly steak sandwich without the cheese. If analysts don’t issue “sell” recommendations, how do they advise investors that they should sell certain stocks?