Michael,
The Macneil-Lehrer Newshour ran a segment tonight on the conflict of interest that analysts who work for large brokerage firms have when recommending stocks; they dare not offend customers or potential customers of the investment banking division. Furthermore, they habitually recommend stocks of companies for whom their firm is doing offerings, without disclosing the conflict of interest. (No great surprise there). The segment included fairly lengthy interviews with Arthur Levitt of the SEC.
This is the second major news piece I have seen on the topic in the last two weeks. My question is: Who is pushing this topic to the media? Arthur Levitt? and why now? wouldn't this information have been a lot more useful, say, three years ago, before so many small investors got fleeced listening to bubblevision? Is there an underlying motive or is the SEC just closing the barn door long after the horse has bolted?
I was reminded of an interesting piece I recently read in the December Atlantic Monthly, about Robert Parker. Robert Parker is a highly influential wine critic, whose score literally set prices for many regions of winemakers, especially Bordeaux. The old wine-producing houses of Bordeaux hate his guts but have no way to undermine his influence, apparently. What is most interesting about Parker is that he is just a hardworking guy from Maryland with a prodigious palate and memory, who in a generally corrupt business does not take gifts from the vintners or negociants and is not afraid to say in his wine ratings whether the emperor does or does not have any clothes.
I find it really interesting that the wine industry was so defenseless against one honest critic, while the defenses of Wall Street seem impenetrable. There are some honest critics, such as Fred Hickey, but they seem to have a hard time getting any air. Why is there no feedback loop in the media that actually rewards good advice and punishes bad? Where are the consumer advocates for investors? |
