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Are Chinese walls enough?

US firms have responded to judicial findings about the integrity of their equity analysts with new safeguards. Do European houses face similar problems and if so how are they dealing with them?


Eliot Spitzer has raised a question that will occupy the financial industry for some time. Enron had the markets worried. Now the New York attorney general has added to investors' concerns. Just when Wall Street buyers were wondering whether the financials they analyzed were lies, Spitzer reminded them that the research they were reading could be bogus, too.

Private emails written by Merrill Lynch analysts castigating the stocks they were recommending to investors have brought into question the integrity of research everywhere. In a bear market, conflicts of interest that had been an accepted way of life for decades are no longer acceptable.

Critics say analysts recommended dubious stocks during the tech boom because their firms aimed to win investment banking work from the companies they covered.

So far, the US firms under Spitzer's gaze have been disposed to accept some changes to the rules governing research.

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