BofA's Timely Ameritrade Call

The timing of an analyst downgrade raises eyebrows.
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Bank of America (BAC) - Get Report has got some timing issues when it comes to issuing research reports.

Whether it was coincidence or not, Banc of America Securities analyst Michael Hecht cut his rating on online broker

TD Ameritrade

(AMTD) - Get Report

-- less than a week before its parent company announced its

plan to offer free online stock trading to qualifying customers.

BofA's announcement Wednesday surprised Wall Street and sent shares of several online brokers, most notably Ameritrade, spiraling into a free fall, as investors were nervous that the initiative would spark a fresh round of price-cutting. Shares of Ameritrade plunged 12%.

Also hard hit by BofA's free stock-trading plan were shares of

E*Trade

(ET) - Get Report

, which dropped 8.8%, and

Charles Schwab

(SCHW) - Get Report

, which fell 4.7%.

There's no indication that Hecht knew about his employer's big news when he issued the downgrade on Oct. 5. There was no mention of BofA's free trading initiative in Hecht's report. Still, it's hard not to raise an eyebrow at the fortuitous timing of the report, which made Hecht looking awfully smart.

In the research note, Hecht, who could not be reached for comment, says the decision to cut his rating on Ameritrade was driven mainly by the big advance in Ameritrade shares over the past few months. In reducing his rating to neutral from buy, Hecht noted that Ameritrade's shares had risen 37% since July, compared to an average 16% gain for other online broker stocks.

Based on BofA's rating system, he wrote, Ameritrade's stock "no longer warrants" a buy rating.

Hecht also trimmed his third-quarter earnings estimates on Ameritrade over a "lower-than-expected" contribution from trading and net interest income.

A bank spokesman was quick to defend Hecht and the integrity of the firm's rating process.

"We are confident in the integrity of our research and our compliance procedures," a BofA spokesman says. "The analyst had no knowledge of Bank of America's plan to offer free online equity trades when he made his rating change, which was in fact driven by the stock price's appreciation to within pennies of his target price."

In fact, on Thursday, a day after the brutal selloff in online broker stocks, Hecht issued another research note defending the group. In the most recent note, he says the selloff "seems to be an overreaction.''

Hecht says BofA's offering targets wealthier clients and is "not aimed at the active trader client base which still comprises a large portion of trades at the online brokers."

Shares of Ameritrade rose 18 cents, or 1%, Thursday to close at $17. Other online brokers also rallied back to life, as other analysts also said investors were unnecessarily panicked.

The analyst consensus is that it's too soon to draw any conclusions from BofA's plan to offer free online stock trading -- up to 30 trades a month -- to customers with at least $25,000 in deposits. Indeed, other free stock-trading promotions have been met with mixed success.