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| 2001 News and Press Releases |
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HEADLINE ARCHIVED:
Can Regulators Put An End To Improper Collaboration Between Analysts And Investment Bankers?
By: Stephen Barr
CFO, The Magazine for Senior Financial Executives. November 1, 2001
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Excerpt: The bubble burst, and the recriminations came next. In the 18 months leading up to September 11, some $6 trillion in U.S. equity investments evaporated. Shares in technology and Internet companies that once traded for hundreds of dollars dipped to a few bucks, or worse. As the Dow sank, bankruptcies, layoffs, and restructurings rose. At the uncertain beginning of the new war on terrorism, it's easy to forget that until two months ago, angry investors sought to blame others for their stock market losses. Chief among their targets was the Wall Street research community. "Analysts are the sacrificial lamb," said A. Gary Shilling, an economic consultant and money manager, in an interview last August. Little wonder, given their track record of irrationally optimistic reports and their bias for touting companies that deliver handsome investment-banking fees. While concern over the credibility of analysts has understandably receded, it hasn't gone away. Shareholders are still suing Wall Street firms for too-bullish calls. Congress has held two hearings this year on the deterioration of the so-called Chinese walls that are supposed to eliminate conflicts of interest among analysts and bankers, and plans to hold more. Regulators have made troubling discoveries, such as analysts executing trades in their own accounts that ran contrary to the advice they gave the public.
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