“It’s an unintended consequence of the global settlement.”
That statement from Samuel Jones of Trillium Asset Management underscores the thrust of the Reuters article “Wall St research suffers since Spitzer deal.”
Mr. Spitzer’s rough-n-ready litigulation of Wall Street gives the stock market a superficial glow of “fairness.” But, as Gianonne and Kahn find, the fairness is a fairy tale; Spitzer’s overhaul puts the little guy at a disadvantage:
Yet while Wall Street cleaned up its stock research ways — as evidenced by the increased number of “sell ratings” and reduction in “buys” — the global research settlement and other regulatory efforts have had unintended and unappealing consequences…Frustrated by the restrictions, there’s been an exodus of veteran analysts fleeing to hedge funds and other “buy side” investment firms, which offer richer pay and greater freedom. Investors and investment banking clients, meanwhile, say the quality of coverage has suffered, with many small companies no longer getting any attention.
Of course, Mr. Spitzer could not be reached for comment. New Yorkers got their money and Eliot will get the cushiest chair in Albany. Everyone else will have to pay the price.
AG Watch is already researching another unintended consequence: how long before one of these erstwhile analysts runs for the NY AG spot? Looks like that is the place to be if you really want to rob investors.