Are you kidding me SEC?

I was truly shocked to learn last night that the Securities and Exchange Commission recently sided with 12 investment banking firms in a lawsuit designed to eliminate a provision put in place in 2003 to maintain the independence of equity analysts relative to financial firm’s investment bankers.

It was widely believed that a gigantic reason why the dot.com bubble happened was because firms’ investment bankers pressured analysts to issue favorable opinions of dot.com businesses in order to secure huge investment banking fees from those same companies.  This is a tremendous conflict of interest that undermines the sanctity of the independent voice that analysts are supposed to represent.  So what the hell is the SEC doing siding with the Wall Street firms to eliminate strict rules that require a firm’s lawyers or compliance department be present when analysts and investment bankers interact?

The SEC sided with the Wall Street firms because it claims that other laws and regulations have provided enough of a “Chinese Wall” between analysts and investment bankers, such that this specific provision is unneeded.  Really?  I think that the last decade has proved that the most recent generation of financial professionals need strict rules in place to govern their behavior.  Each time regulations are rolled back there is exploitation of loopholes for profit and annual bonuses the likes of which God has never seen.

Jason