NASD says: Do tell

When Wall Street analysts tout stocks on TV, the accompanying disclosures, now largely voluntary, may soon be enforceable rules if the National Association of Securities Dealers has its way.

Last week, the NASD issued a proposal—which it will urge the SEC to adopt—that would require analysts to disclose any financial interest in stocks recommended on TV and in other public forums.

NASD says analysts ought to disclose whether their firm owns 5% or more of any recommended stock. It asked for comments from the securities industry as to whether disclosure should apply to ownership below the 5% threshold.

"An analyst's report can have a great impact on buying and selling decisions, so investors must be made aware if potential conflicts exist," explained NASD President Robert R. Glauber.

A CNNfn spokeswoman said the network already asks analysts to voluntarily disclose any potential conflicts the analyst or his or her firm might have concerning stocks the analyst would discuss on the air. She noted that analysts undergo "extensive" interviews and are asked to disclose in writing potential conflicts, which are usually read on the air.

A CNBC spokesman said the proposal "is in line with what we've been doing for a number of years. They're looking to take it a step further and make it a more formalized policy."

Rich Dubroff, executive producer, Wall $treet Week With Louis Rukeyser, said that, "as long as they're not telling us to disclose anything, it's all right," asserting that a rule requiring the media to disclose potential conflicts would violate the First Amendment.

Sources say that part of NASD's concern stems from some cases in which analysts have appeared during market hours and said something that triggered a huge, almost immediate gain for a particular security.

Several Wall Street firms, including Merrill Lynch and Goldman Sachs, declined to comment, pending a fuller review of the proposal, or didn't return calls seeking comment.