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| 2002 News and Press Releases |
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HEADLINE ARCHIVED:
Reform For Analysts Outlined Each Bank Faces Paying Up To
$100M To Fund Oversight
By: Thor Valdmanis
USA TODAY. October 25, 2002
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EXCERPT: Scandal-scarred Wall Street investment banks were read the riot act by securities regulators Thursday and told to pay up to $ 100 million each to finance a new regulatory board. The proposed oversight board, designed to regulate stock research and ensure small investors have access to independent analysis, is the centerpiece of a sweeping reform package outlined by New York Attorney General Eliot Spitzer in a three-hour meeting Thursday between top lawyers from Wall Street firms and state and federal regulators. Industry sources with knowledge of the tense gathering at the Securities and Exchange Commission's Washington headquarters say the Spitzer reforms are so costly they could trigger layoffs for thousands of research analysts. Wall Street has already cut thousands of jobs because of the stock market's decline. Spitzer, with the backing of the SEC, is calling on the securities industry to separate research from investment banking and pay $50 million to $100 million per firm over five years to finance the oversight board. The money would fund and promote independent equity research that would be offered along with research reports that the big firms produce. As part of the deal, Wall Street firms also will be forced to pay hundreds of millions of dollars in fines to settle charges that big securities firms published favorable analyst coverage on companies in exchange for investment-banking business, duping investors in the process. The banks are expected to pay the fines without admitting or denying the allegations, hoping to avoid more class-action lawsuits by shareholders. Individuals could still face prosecution.
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