Congressmen: SEC Probing 10 Analysts
Fri May 31,11:59 AM ET
By MICHAEL GORMLEY, Associated Press Writer
ALBANY, N.Y. (AP) - The Securities and Exchange Commission (news - web sites) is investigating 10 allegations of conflicts of interest by Wall Street analysts, a congressman said.
Rep. Ed Markey of Massachusetts released materials that showed the SEC Enforcement Division has 10 pending enforcement inquiries underway and the National Association of Securities Dealers and the New York Stock Exchange (news - web sites) are investigating 37 potential conflicts of interest by analysts rating stocks their firm seeks to land as investment banking clients.
The action by Wall Street regulators follows the investigation of more than a half-dozen brokerages headed by New York Attorney General Eliot Spitzer and the North American Securities Administrators Association.
"This is good news, since vigorous enforcement is an important deterrent to potential wrongdoers," said Markey, a Democrat on the House Energy and Commerce Committee.
The additional investigations were revealed in a report Markey requested from the SEC, the New York Stock Exchange and self-regulating agencies on Wall Street.
Among the disclosures:
_Some of the 10 investigations involve investment banking conflicts with analysts, the focus of Spitzer's investigation and subsequent settlement with Merrill Lynch & Co.
_Four inquiries relate to analysts who allegedly traded the securities they covered.
_One involves an analyst who was allegedly paid by an issuer of stock.
Markey said tougher, industrywide rules are needed than were approved by the SEC on May 8 to curb conflicts of interest. Those rules require analysts to clearly disclose, in research reports and TV and radio interviews, their financial interest in companies whose stock they recommend. They also prohibit securities firms from tying their analysts' compensation to some investment-banking business the firms do for companies.
"As it evaluates whether further action is needed to address analyst conflicts, I urge the commission to set its sights on the higher standards established by Merrill Lynch's agreement with the New York attorney general," Markey said.
Spitzer settled May 21 with the nation's largest brokerage. Merrill Lynch agreed to pay a $100 million fine and to separate analysts from the investment banking branch, a structural reform that would be overseen by an in-house monitor.
Spitzer didn't immediately respond to a request for comment. |
