Ratings Change At Morgan Stanley

Morgan Stanley Dean Witter, the second largest US brokerage house, advised Monday that it will change the way it's analysts rate stocks.

The firm will no longer simply rate companies 'buy' or 'sell' and will introduce a new rating system from 18th March which will rate companies chances of outperforming their competitors. The new ratings will be 'overweight', 'equal-weight' and 'underweight'.

The move is clearly designed to make the ratings more relevant for investors and is seen by some as another indication that the investment banking community is determined to be seen as beyond reproach in the aftermath of the Enron scandal.

It is difficult to see, however, how cosmetic amendments to the ratings will overcome fears from investors of biased recommendations.