PALM BEACH GARDENS, Fla., January 21, 2003 - Among the publicly available ratings from 30 brokerage firms covering companies filing for bankruptcy between September 1 and December 31, 2002, the ratings from 20 firms, or 66 percent, continued to recommend that investors buy or hold shares in the failing companies right up to the day they filed for Chapter 11, according to a study by Weiss Ratings, Inc., the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds, and stocks.¹ This represents a modest improvement compared to earlier Weiss studies showing that the ratings available from 74 percent of brokerage firms recommended companies failing between May 1 and August 31, 2002, and 94 percent recommended those failing between January 1 and April 30, 2002.

"We have seen widespread investigations by the state regulators and the SEC, a massive public outcry, and solemn promises by Wall Street to change its ways," commented Martin D. Weiss, Ph.D., chairman of Weiss Ratings, Inc. "Despite all this, the ratings available from most brokerage firms continue to urge investors to buy or hold the shares in companies, even as their lawyers are marching up the steps of bankruptcy court. However, on a positive note, at least some notable firms have given up this egregious practice in recent months."

During the four-month period ending December 31, 2002, 51 public companies filed for bankruptcy. Of this group, 18 bankrupt companies were rated by the brokerage firms covered in this analysis, receiving a total of 55 ratings.² These ratings break down as follows:

Breakdown of Publicly Available Ratings Issued by the 30 Brokerage Firms on Companies Filing Chapter 11

	On Date of Bankruptcy Filing			6 Months Before Bankruptcy Filing
Ratings Issued:	# of Ratings	%		# of Ratings	%
"Buy" or equivalent	4	6.8		13	22.0
"Hold" or equivalent	21	35.6		30	50.8
"Sell" or equivalent	30	50.8		8	13.6
Dropped coverage/not rated	4	6.8		8	13.6
Total	59	100.0		59	100.0

In analyzing the breakdown of ratings issued on failing companies, Weiss found that the number of "sells" in the public domain rose to 50.8 percent by year-end as the industry responded to calls for reform. Conversely, the number of "buy" and "hold" ratings declined to 6.8 percent and 35.6 percent, respectively. The following graph illustrates how the distribution of ratings on bankrupt companies has changed over the course of the three time periods evaluated:

"The increase in sell ratings by brokers is another positive sign," added Dr. Weiss. "What remains to be seen is whether or not the industry will continue to improve once regulators turn their attention elsewhere."

Nine Brokerage Firms Issue Only "Sells" to Failing Firms

Among the 30 brokerage firms studied, the ratings available from nine, or 30 percent, were exclusively "sell" ratings on companies filing for bankruptcy during the last four months of 2002. Lehman Brothers and Salomon Smith Barney accurately warned investors about troubled companies, each issuing four "sells" exclusively. The other firms that warned the public of failing companies, issuing only "sells," were Blaylock & Partners; Buckingham Research; Deutsche Bank; Goldman Sachs & Co.; Kaufman Bros.; Loop Capital Markets; and Merrill Lynch.

In contrast, the four brokerage firms from which the public would have received a "buy" rating on a company filing for bankruptcy between September 1 and December 31 were Bear Stearns; Credit Lyonnais; Punk, Ziegel & Company; and SCO Financial Group.

"Until further progress is made, investors should continue to check with at least one independent source when considering the stock ratings issued by brokerage firms," advised Dr. Weiss.

Weiss issues safety ratings on more than 15,000 financial institutions, including insurance companies, banks, and brokerage firms. Weiss also rates the risk-adjusted performance of more than 11,000 mutual funds and more than 7,000 stocks. Weiss Ratings is the only major rating agency that receives no compensation from the companies it rates. Revenues are derived strictly from sales of its products to consumers, businesses, and libraries.

Consumers needing more information on the financial safety of a specific company can purchase a rating and summary analysis for as little as $7.95 through www.WeissRatings.com, or starting at $15 by calling 800-289 9222.

Note to Editors: Here are links to a table listing the 30 brokerage firms with their publicly available ratings on 18 companies that filed Chapter 11 between September 1 - December 31, 2002 broken out in buy/hold/sell categories and another table with a breakdown of the buy/hold/sell ratings received by those 18 companies.

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¹Publicly available ratings are defined as those that investors or brokers have access to via Bloomberg, Yahoo.com, and Briefing.com. In some cases, brokerage firms may have notified private sources such as First Call or Zack's that they dropped coverage or changed the rating on the stock prior to the failure date. However, these private sources are available strictly to clients of the firms. In total, 51 publicly traded companies filed for Chapter 11 between September 1 and December 31, 2002, with a combined peak market capitalization of $67 billion. Of these, only 18, with a combined peak market capitalization of $49 billion, were rated by the brokerage firms covered in this analysis. The analysis covered 51 stock ratings available from 30 brokerage firms six months before bankruptcy and 55 ratings at the date of bankruptcy filing.

²The number of ratings issued declined from 118 during the previous four-month period to 55 due to fewer large companies filing for bankruptcy between September and December 2002. The total market cap for all public companies filing for bankruptcy dropped to $67 billion, compared to $185 billion during the previous four-month study. Analysts are more likely to cover companies with larger market caps, thus the decline in the number of ratings issued.