Research/IB Wall to Fall?
Spitz's brainchild, the Chinese Wall that prevents contact between research and bankers, may be no more:
From Bberg:
"After the dot-com bust a decade ago, regulators forced Wall Street to adopt rules aimed at keeping stock analysts from over-praising companies doing deals with their banks. President Barack Obama is set to sign a law that would undo at least some of the changes.
One measure in the bill, passed by Congress March 22 to ease securities rules for closely held firms, would restore communication between bank research and underwriting arms. Those links were restricted in 2003 by regulators and by a separate settlement between then-New York Attorney General Eliot Spitzer and 10 firms including Goldman Sachs Group Inc. and JPMorgan Chase & Co."
This is a big deal. I only know our current world, but if pay goes back toward pre-Spitz levels.... I am all for it.
The real argument for the bill: small firms don't get the coverage they used to. Thoughts?
At least the banking bias will be out in the open again.
the chinese wall is cute in theory... you'd be naive to think interaction between the two departments still doesn't exist
All I ever wanted to ask them, is if they wanted to party with us.
We do =(
Our systems don't even allow us to send bankers emails. All conversations are chaperoned. Very lame.
This does seem like a pretty huge deal. How come it hasn't gotten much attention on other finance blogs or news sites lately? Or have I just totally missed it?
I gotta say, if you look at a lot of companies, it's pretty damn obvious that global settlement is a failure. There are any number of cases of flimsy / start up / aspirational business models that the Street is insanely bullish for because the companies have a history of doing secondary offerings to keep themselves afloat. If a research analyst wants to, he / she can make a case for just about anything. These often make pretty fantastic short candidates. Mostly happens at MM firms, and a few MM firms in particular.
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