Securities firms are still debating a
global settlement over equity research with New York state attorney
general Eliot Spitzer, the SEC and other US prosecutors seeking to
avenge investors' losses. All the parties, though, seem to have
lost sight of their true purpose. The changes proposed so far will
neither restore faith in the system nor prevent future abuses. They
are unworkable and thus irrelevant. Proposed reforms are targeted
at the wrong level: at the institution not the individual.
If you really want to influence analysts' behaviour, there's only
one route to follow - regulate their pay, focusing not so much on
how much they are paid but what they are paid for.
These are the suggestions of Cary T Mills, managing director of an
investment banking headhunting business who has specialized...
