Why Security Analysts have gotten a bad name

For most of my Wall Street career I worked as a Security Analyst.  I would like to think that in the course of my career I performed some significant objective research.  Much of my labor as an analyst was at Argus Research which was a truly independent research firm.  No fees.  No investment banking connections.  No market making. We were pure objective research.  So today, it troubles me to see what is happening to the profession.  As an example of the deterioration of professionalism within the analyst fraternity I point to a recent research report on Auxulium  Pharmaceutical (Nasdq-GS-AUXL) by an outfit called FTN Capital which is division of the Tennessee Bank National Association Readers

Readers should know that on March 16 FTN initiated coverage of AUXL with a BUY rating.  Yesterday, that opinion was changed to SELL, with the analyst claiming that in the initial report he wasn’t given enough weight  to potential problems with a new drug being tested for market by Auxillum (AUXL- Nasdq).  At this point it should be noted that this alleged new development also impacts a stock that I own, Biospecifics Technologies (Nasdq-GA-AUXL)).  Anyway, the new analytical revelation sent both AUXL and BTSC stock prices sharply lower yesterday.  Now we have checked the FTN web site and determined the it makes a market in AUXL.  Anyway, we have talked with those who know and they report that the new drug concerns of FTN are just not accurate.  You really got to wonder about research these days!

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