The rules were approved Wednesday morning by a 3-0 majority vote of the SEC's five commissioners in response to growing public concerns about the integrity of US stock research.

The reforms were put forward by the New York Stock Exchange and the National Association of Securities Dealers in a bid to tighten regulatory oversight of securities analysts and in the wake of Congressional hearings into analysts' stock ratings during the bull market of the late 1990s.

Specifically, the new rules prohibit analysts from offering or threatening to withhold a favourable research rating, or a specific price target, to induce investment banking business from companies.

Banks that sponsor an Initial Public Offering of securities would also be barred from issuing research reports on the stock being issued for 40 days after the IPO.

Investment bankers would also be barred from supervising analysts' research reports and barred from discussing such reports prior to publication. Analysts would also not gain compensation from specific investment banking deals.

Analysts would also have to disclose their stock ownership and the percentage of their 'buy', 'hold' and 'sell' recommendations as well as disclosing any investment banking relationships their bank may have during public interviews.

The proposals have been put together by the NYSE and the NASD during the past two months as lawsuits against Wall Street banks for alleged biased research or stock recommendations have begun to mount.

Several Wall Street banks are facing a mounting number of lawsuits from disgruntled investors who claim analysts advised them to put their investments in companies whose IPOs they were sponsoring or in firms that the banks were also seeking investment banking business from, and that this led them to issue favourable research on the companies.

SEC officials said all the new rules approved today governing analysts' conduct would become fully effective by the end of the year.