Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: tradermike_1999 who started this subject	1/4/2002 2:32:53 PM
From: Baldur Fjvlnisson	Read Replies (1) of 74559

I think that if you want to play cop it helps to have a clue about what's going on in the environment you're supposed to police: *I wanted Levitt to explain to me how what the kid did was ethically different from what Wall Street analysts did every day. He couldn't -- at least not to my satisfaction -- so he called Walker into his office. No sooner had I repeated my unpleasant question than Walker became upset with me. He said my point was ridiculous, because Wall Street analysts didn't own stock in the companies they recommend. Plausible, Just Wrong I didn't call him on this as a) I assumed he knew what he was talking about, b) it sounded like a reasonable enough claim, since most journalists are prevented from owning stuff they write about and c) there was a more insidious conflict of interest on Wall Street, one that much more successfully corrupts analysts' willingness to tell the truth: Every analyst knows that if he offends a big company with a negative recommendation, he puts in jeopardy his employer's ability to rake in huge investment banking fees from that company.* *So They Were Clueless? It's fiercely tempting to make Richard Walker's -- and the SEC's -- idiocy the point of this column. It's amazing to me that the SEC's director of enforcement would be as clueless as everyone else about what appears to have been standard practice on Wall Street. (At what point do investigators investigate themselves, and explain how on earth they remained blind to all of the financial activity that occurred right under their noses during the Internet Boom that they now claim to find so sinister?) But the truth is, I didn't know myself that Wall Street analysts owned the stocks they told investors to buy. (Did you?) So perhaps Walker was just ordinarily stupid rather than extraordinarily so.*

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