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| 2002 News and Press Releases |
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HEADLINE ARCHIVED:
Wall Street's $1.5B Reform On Precipice Of Settlement Critics Unsure Reforms Will Really Help Small Investors
By: Thor Valdmanis and Noelle Knox
USA TODAY. December 20, 2002
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EXCERPT: Swimming with the sharks on Wall Street could get safer for small investors. Securities regulators, at least, are expected to make that case today once the finishing touches are completed on a controversial $ 1.5 billion package of fines and reforms of Wall Street practices. While cautioning that an announcement could be delayed until next week, people close to the talks were optimistic Thursday night that last-minute objections by investment banks to the wording of some final documents would be resolved. A deal would settle the largest case ever brought by regulators against the securities industry. The nation's top 10 investment banks and brokerages are expected to pay about $ 1 billion in fines and $ 500 million over five years to finance the distribution of independent research to small investors. The fines will be split among the investigating state regulators and the Securities and Exchange Commission. The reforms also would establish a sweeping set of rules aimed at eliminating tainted Wall Street research and stock offering practices that investigators say were prevalent during the 1990s market boom. After months of back-room shouting matches and horse trading, the nation's top investment banks and brokerages are reluctantly signing on to the settlement in an effort to buy peace after a punishing year of leaked e-mails and other internal documents purporting to show ugly behavior. "We're very, very close to a settlement," Chris Bruenn, head of the North American Securities Administrators Association, said Thursday night. "A settlement will help restore faith in our markets if it changes the corporate culture, metes out meaningful penalties and gives investors independent research and the facts they need." The NASAA is the state securities regulators' group. Those facts were the center of a last-minute dispute Thursday night. Firms led by Merrill Lynch and Bear Stearns fear the inclusion of any wording in the final settlement that suggested they were admitting to wrongdoing would bolster the mountain of shareholder arbitration and class-action lawsuits pending against the industry. Banks are unlikely to win the debate, particularly because regulators plan to release more incriminating e-mails and other documents next year as part of a final "record of finding." Cases against individual bankers, such as former Citigroup telecoms analyst Jack Grubman, Credit Suisse First Boston high-tech dealmaker Frank Quattrone and former Merrill Lynch Internet analyst Henry Blodget, are still being pursued.
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