Generalstaatsanwalt Spitzer als Party pooper *gg*

verfasst von kingsolomon, 13.11.2002, 15:49

-->Spitzer Says Analysts' Awards Are Used Deceptively (Update1)
By Philip Boroff


New York, Nov. 13 (Bloomberg) -- Institutional Investor magazine took a chance when it invited New York Attorney General Eliot Spitzer -- currently investigating fraud in Wall Street research -- to speak at its annual analysts' awards dinner.

The organizers may have gotten more than they bargained for.

Spitzer told the analysts receiving awards last night: ''It is inappropriate for your employers to cite these awards when touting your buy, sell and hold recommendations to individual investors.''

Speaking at the Ritz-Carlton in Battery Park, Spitzer said that while this year's Institutional Investor award winners may have won a popularity poll of 3,500 professional money managers, they fell flat in consistently picking stocks that go up.

Spitzer added he may propose rules requiring brokerage firms to disclose analysts' stock-picking performance.

Just one of the analysts the magazine named as part of its ''First Team'' ranked first in stock picking in his or her individual industry sector, Spitzer said, citing data compiled by Investars, a Hoboken, New Jersey-based independent research firm that tracked the performance of the analysts' stock picks in the 12 months prior to receiving the magazine's awards.

''This does not mean that analysts honored here tonight do not deserve their awards -- these are institutional investor awards and thus reflect criteria important to institutional investors,'' Spitzer said. ''But since my focus has been on protecting individual investors, I want to call attention to the industry's use of these awards, which is in need of reform.''

'Simply Deceptive'

Investors, Spitzer said, have been led to believe that the Institutional Investor awards measure the performance of the analysts' recommendations.

''The brokerage houses tout these awards to the investing public together with the analysts' stock recommendations,'' Spitzer said. ''That message is simply deceptive.''

More than 40 percent of the award-winning analysts didn't perform as well in stock picking as the average analyst in his or her sector, Spitzer said.

Spitzer also poked fun at his probe, in which he's collected thousands of e-mails from firms in search of evidence that they hyped stocks to win investment-banking business. ''It is wonderful to be here this evening,'' he said, ''because I really want to put faces to all those e- mails.''

The attorney general's talk received muted applause from the audience of some 250 analysts.

Michael Carroll, Institutional Investor magazine's editor, defended the rankings and agreed they're not intended for individual investors.

Carroll invited Spitzer to Washington Heights, in northern Manhattan, where the editor grew up. ''If we can find anyone there who bought a stock because it was recommended by an II-ranked analyst, I'd be glad to buy him lunch.''

In an interview, Carroll said money managers tend to put greater weight on an analyst's industry knowledge and accessibility than stock- picking. He added that he couldn't comment on Investars' data without seeing it, because there are a variety of ways to assess the performance of stock ratings.

The Institutional Investor survey results appear in the magazine's October issue. During the bull market, a No. 1 ranking could double an analyst's pay.

Spitzer said the ''lack of transparency'' about the analysts' performance is more troubling than the performance itself. He said it was ''surprisingly difficult'' for his office to obtain the performance data, and too expensive for most individual investors to buy.

Research Reforms

Spitzer said he may push for reforms related to the use of such awards to promote analysts as part of his discussions with the largest brokerages to settle conflict-of-interest probes. The firms, such as Citigroup Inc. and Credit Suisse First Boston, are trying to head off charges that they misled investors with research designed to promote investment-banking clients.

Spitzer proposes requiring brokerages to make their recommendations available to the Securities and Exchange Commission or another regulator within 90 days of being issued. The firms should make available that data so others can assess the analysts' stock picking ability.

''I believe that achieving this transparency should be an element of any global resolution that is negotiated with the industry,'' Spitzer said. ''Industry leaders have been claiming for several months now that they favor transparency. If they do, this is an easy first step.''

Citigroup's brokerage unit, Salomon Smith Barney Inc., had 53 analysts rated the best in their field, the most of 15 rivals, according to the survey results. Salomon was also first in 2001.

Sallie Krawcheck, hired last month to lead Citigroup's research and brokerage, accepted the award. She praised Spitzer, who is now focusing his industry investigation on Citigroup.

''He is working to get more transparency to the market,'' said Krawcheck, who chatted with the New York Democrat during one of the breaks in the dinner. ''Sunshine is the best disinfectant.''

Lehman Brothers Holdings Inc. and Merrill Lynch & Co. tied for second place, with 52 top-ranked analysts each.

Carroll of Institutional Investor said he wasn't angry at Spitzer. ''He came in and spoke his mind,'' he said. ''That's what you expect. What would you want him to do?''

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gesamter Thread:

• Generalstaatsanwalt Spitzer als Party pooper *gg* - kingsolomon, 13.11.2002, 15:49
  • Re: Generalstaatsanwalt Spitzer als Party pooper *gg*----zu Spitzer in deutsch - 000, 13.11.2002, 17:24
    • Wenn man mit eigenen Waffen einen Gegner nicht bekämpfen kann - Turon, 13.11.2002, 17:33