Feds And Wall Street Settle Over Biased Ratings
from the but-where-does-the-money-go? dept
It appears that SEC investigators and the major Wall Street brokerage firms have come to an “agreement” on the investigation over whether or not those firms lied about their analysis during the boom years in order to attract more investment banking business. Everyone knows they did this – it wasn’t even particularly secret at the time. The settlement means that the firms will pay out $1.4 billion in penalties, though (as is always the case) they don’t admit to any wrongdoing. Some of the more notorious analysts also are being forced to pay up as part of the deal (including Blodget and Grubman – who still made out with more cash than they have to pay back). The deal also says that Wall Street firms need to cut ties between stock research and investment bankers. Of course, there was already supposed to be a “Chinese Wall” between the two practices, but that never seemed to work. I also wonder where this $1.4 billion goes? There don’t seem to be any plans to give that money back to all the investors who were suckered into buying stocks that the analysts praised publicly, while trashed privately. Of course, you could easily argue that most of those investors knew what they were doing (and what Wall Street was doing) the whole time – so maybe they don’t deserve their money back either.
