Stock analysts’ conflicts of interest: the road to “independence” in stock research

Abstract

In the two years following the bursting of the high‐technology and telecommunications stock “bubble”, various legal proceedings and regulatory actions have brought Wall Street to the brink of creating a “independent” stock research arm that purportedly would create a separation between the research and investment banking functions of major Wall Street firms. This new research scenario is largely a result of the confluence of the legal and regulatory proceedings and a dramatic loss in confidence by public investors in the quality and objectivity in research provided by their brokerage firms. This article examines the legal, legislative, and regulatory proceedings that have led to this dramatic change in the way Wall Street will conduct stock research in the future.