The investigation by the various state and federal government agencies into conflicts of interest in Wall Street research has ended with a massive settlement. The firms have agreed to quit nefarious practices like IPO spinning and pony up $1.4 billion — to settle charges against them and to fund independent research and investor education.
This, of course, is not the end of the story. What is somewhat less clear is what this will mean to the firms — they have to use independent research, in addition to furnishing their own, and will have to make public all recommendations for the world to see.
What is far from clear is how all the new procedures will affect how reps recommend and sell shares. One thing is for sure: The days of relying solely on one firm's research are over — even if it's really good. The settlement requires brokers to furnish no fewer than three independent opinions on a stock. And, we have heard New York AG Eliot Spitzer is pushing for a requirement that any time a rep recommends individual stocks, he will have to furnish dissenting opinions from other firms. That should make closing the sale a cinch — right? Can you say managed money?
All kidding aside, the recommending of individual securities by reps isn't going to go away. (Wirehouses, in particular, still rely on selling individual stocks despite the banging of the managed account drums.)
We here at Registered Rep. think we can help. Starting in February, when you visit our Web site, registeredrep.com, you will see a new feature. We have signed an exclusive agreement with Argus Research to provide independent research reports that are specifically designed with you, the advisor, in mind. Argus began selling research in 1934 — during a much worse bear market — and has proven to be a reliable source of investing ideas. By hitting the Argus button on our Web site and signing up, you'll be entitled to a 30-day free trial subscription. There are reports on the economy and individual stocks, as well as weekly staff reports with opinions about issues to buy and to avoid.
Broker Awards
It's time to begin our search for our 23rd annual Outstanding Broker Awards. Unlike our annual Biggest Brokers in America survey, the OBA award is a peer-driven one, meant to recognize a rep who provides excellent service to client and firm, yes, but also to focus on some of the harder-to-quantify qualities, such a leadership and charity. We're looking for nominations of top producers who also help their fellow reps in their offices, and who involve themselves with charities for non-material gain. Oh, and that these candidates all have clean U-4s. Well, that goes without saying. For an application form, see page 77. We'll choose 10 people who are a credit to branch, firm and town.
We thank you for your support. Drop us a line with your comments at: 249 W. 17th St., New York, N.Y. 10011-5300. Or email us, [email protected]. Publisher Rich Santos can be found at [email protected].