The Association for Investment Management and Research has issued draft “AIMR Research Objectivity Standards” setting forth ethical business practices that issuers and investment-management firms should follow to create an environment that promotes objective securities research and analyst independence.

AIMR’s proposed standards prohibit both public companies and investment-management firms from retaliating against research analysts who issue undesirable recommendations or ratings on corporate issuers. They also require issuers and investment-management firms alike to establish formal written policies supporting independent and objective analyst research and to have a senior corporate officer publicly attest at least annually that the company or firm is adhering to the policy.

AIMR also says that issuers: should not file legal suits against research analysts for their recommendations, should not make accusations against analysts in the media, and should not seek to review an analyst’s report in advance of publication.

The draft standards state that “buy side” firms need to require their employees who discuss their research and recommendations in public appearances to disclose fully to the audience all personal and firm conflicts of interest. They also state that buy-side firms need to ensure that investment professionals do not have the ability to “front run” their clients, and need to prohibit investment professionals from buying or receiving “pre-IPO” securities.

The standards also call for firms to prohibit employees from pressuring sell-side analysts to issue favorable research, prohibit employees from encouraging the public company that is the subject of the research to retaliate against a sell-side analyst, provide full disclosure of all conflicts of interest.

The draft standards for “sell side” firms incorporate the new rules approved by the U.S. Securities and Exchange Commission, such as ensuring that investment banking or corporate finance departments do not influence research.

The AIMR standards also call on the media to facilitate disclosure of any conflicts of interest of the investment professionals they interview. The media should also establish formal written policies for the handling of these disclosures and implement supervisory procedures to ensure that the disclosures reach their media audience.

Although AIMR has no regulatory authority to compel firms to adopt its standards, Bowman said, “Our hope and our belief is that current concerns about investor confidence will exert market pressure on firms to embrace AIMR’s standards and recommended practices voluntarily. We expect that over time the question, ‘Has your firm adopted AIMR Research Objectivity Standards?’ will become a deciding factor in determining whether to buy research from a broker or do business with an investment firm.”

The proposed standards are being released for a 90-day public comment period that will end Oct. 17. AIMR will then finalize the standards and promulgate them worldwide.