Investment bank research: Who is pulling the strings?
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Investment bank research: Who is pulling the strings?

No-one believes that investment bank research is fully independent. As competition and costs escalate, the pressure on analysts to hawk deals and withhold negative views is intensifying. While some analysts get rich in the new environment, many have quit, and investors have turned to their own and third-party research. Michelle Celarier reports.

After 15 years spent working as a Wall Street analyst, "the tremendous conflict of interest" Joyce Albers felt between her responsibility to investors and the demands of her firm's investment banking clients finally convinced her to leave. Although Albers was a top-rated analyst at CS First Boston, covering pharmaceutical and healthcare companies, she claims much of her time was spent following a handful of companies that were the firm's banking clients, not those who she thought offered exciting investment opportunities.

"It's the hand that feeds you", she says of the corporate clients,whose fees at CSFB paid an estimated 50% of her bonus. Forced at one point to quit covering a company because of "some strange internal reason on the banking side", she was further disheartened by a culture in which investment bankers were allowed to go ahead with deals that analysts begged them not to do. When such business goes sour and investors call to complain, "it is the analyst who is left with the problem", shere calls. Albers switched last year to the buy side and now works as an analyst for the US institutional investment firm Deerfield Management, where she views Wall Street research with a healthy dose of scepticism.

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