Wall Street Analyst Scandal
The practice referred to as "spinning" has been a hot topic in light of the huge fall out from corporate fraud that has affected investor confidence and resulted in new laws being created. A lot of investors suffered huge financial loss because of the Wall Street analyst scandal, which is considered one of the most negative, discomforting occurrences in Wall Street history. The fraudulent practices uncovered were finally hard evidence that confirmed many suspicions of corporate fraud occurrences.
A final settlement has finally been reached after nearly four month of trying to come to agreement regarding particular language used in the settlement because firms involved are trying to avoid any amount of increased legal liability. The settlements have involved biased stock research by large investment banks. Banks have been misleading investors and new laws requiring more disclosure and transparency from corporations have been created in hopes of helping eliminate corporate fraud.
Sources familiar with the scandal have said that the SEC has given firms until Monday, April 28, 2003 to sign and deliver documents that agree to final terms. The SEC will then vote on the settlement Tuesday, April 29, 2003 and make an announcement the following day. The final settlement has been a very long awaited conclusion to the many hold-ups that have occurred, but sources warn last minute disagreements can cause further delays still.
The conclusion of the settlement will result in many lost jobs and money, but hopefully investors will have renewed confidence in the industry and will be able to trust research analysts are providing unbiased stock opinions. In addition, people that have suffered great monetary losses due to the corporate fraud may be able to recover damages in securities fraud class action lawsuits.
For more information on securities fraud contact us to confer with a securities fraud attorney.
Settlement Involving Wall Street Analysts
The settlement involving 10 Wall Street firms has been a long awaited conclusion to the regulatory investigation uncovering a long suspected practice that stock analysts were misleading investors. According to Eliot Spitzer, New York's attorney general and man who's efforts to investigate investment banks uncovered the vast underbelly of corporate fraud, the settlement with investment banks is all but final and waiting for approval from the SEC.
The firms have denied any wrongdoing, but back in the December 2002 preliminary settlement the firms involved in the corporate fraud agreed to fines and other payments, in addition to changing the way business is done. Under terms of the settlement, the firms that have been involved in the securities fraud will pay $900 million to federal and state regulators, $85 million for investor education, and $450 million to provide customers with independent research.
The settlement has thus far been a bit controversial because commissioners have been wondering if the agreement is too harsh or too loose. Citigroup's Smith Barney unit will have to pay the largest single amount at $400 million. Merrill Lynch agreed to pay $100 million toward investor education and independent research and a $100 million penalty that the company had agreed to earlier. Included in the final settlement, regulators have said that three firms including, Citigroup's Salomon Smith Barney unit, Merrill Lynch & Co., and Credit Suisse First Boston Corp. will be charged with committing fraud against investors. According to regulators, fraud charges will be dropped in the final settlement in exchange for the firms agreeing to reforms.
Expected to be included in the final settlement is explicit guidelines to how and when a Wall Street investment banker will be able to interact with analysts. Already, there have been broad outlines that have been known for months. Firms will be given information on how to buy and distribute third-party research. Two independent monitors will be assigned to each firm to oversee compliance with the settlement and the firm can only pick their own monitor if regulators approve it.
This was one source of the delay because some firms had their choice monitors denied. Eliot Spitzer, New York's attorney general and man who's efforts to investigate investment banks deemed him Time magazine's 2002 crusader of the year, wants to provide a road map for shareholder Fraud Claims and arbitration claims. What the final wording of the settlement will include will remain unknown until it has become final, as well as the amount of evidence from the fraud investigations will be released. This information will affect how the corporate fraud involved firms will be pursued in securities fraud class actions.
If you wish to seek legal action against a Wall Street analyst, contact our stock fraud attorneys right away.