Will Wall St. ever reform??

Discussion in 'Trading' started by trader99, May 23, 2002.

  1. trader99


    Now that MER settle and Solly is reforming its analyst pay, will we ever get "real" research on wall st.?

    I don't think so! It's still a selling machine.. That's why the best honest analyst go on the buy-side, because that's where their money goes with their mouth.

    Salomon to Separate Analysts Pay

    By Diane Hess
    Staff Reporter
    05/22/2002 05:57 PM EDT

    Citigroup (C:NYSE - news - commentary - research - analysis), which employs the man many consider the poster child for analyst excess on Wall Street at its Salomon Smith Barney unit, has wasted little time following Merrill Lynch (MER:NYSE - news - commentary - research - analysis) down the path of contrition.

    A day after Merrill settled charges of giving misleading stock analysis to investors, Salomon decided to change the way it compensates its research department.

    As part of his widening investigation, New York Attorney General Eliot Spitzer issued a subpoena to Salomon in late April, requesting documents related to onetime star telecom analyst Jack Grubman's research. Grubman has been held up repeatedly as embodying the blurred lines between investment banking and research, reportedly ringing up multimillion dollar paydays for his work luring clients to Salomon's corporate finance department.

    In an internal memo on Wednesday, Salomon praised Merrill's "landmark settlement," in which it paid out $100 million and agreed to separate analyst compensation from investment banking.

    "The reforms embodied in the settlement set a new industry standard necessary to maintain investor confidence and provide a useful template," said Mike Carpenter, chief executive of Salomon Smith Barney, in the memo. "I am pleased to announce that we are embracing that standard."

    As a result, Salomon will "separate completely" the evaluation and compensation of equity research analysts from investment banking, "consistent with the guidance in the agreement." In addition, the bank is forming a "robust" research committee, along the lines described in the settlement.
  2. No they will never change; and if they did how would they replace the revenue from the fines to keep the system going?
  3. Will it reform?

    I have no way of knowing, but I personally doubt it.

    I think the important thing is that it is PERCEIVED by the public to be reformed. (And we can all gear up for the next bull market :) )

  4. No, the rules are modified but the game continues ...
  5. Let's look at it from the other side. What would you be willing to pay for research?
  6. Nothing.
  7. Now they're making it seem like they're fixing the problem which is another big lie; more hypocrisy. The only real cure is a complete spin-off of research divisions. Anything else is a joke and more fraud. Have you seen that fat pig Komansky on CNN? He was like "our research has not been compromised." Lying through his teeth!
  8. They fixed the problem alright. It is like putting a chastity belt on a hooker and handing her the key.