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Time to turn the spotlight on investors

In the unseemly and increasingly desperate scramble by the leaders of Wall Street firms to do a deal with the SEC, Eliot Spitzer and the whole posse of state prosecutors pursuing them over bent research and IPO spinning, common sense was ditched long ago.

It's been apparent since the summer that the senior executives of the leading American investment and universal banks will agree to just about any imposition: they'll sacrifice any part of their firms, adopt almost any new business model no matter how idiotic - just to get the vengeful lawmen off their trail.

They'll separate research from investment banking, abandon research entirely, whatever it takes. These men are living in fear - fear of huge fines and civil suits, fear that rivals will somehow shape a settlement with the legislators that will better suit their own firms, fear that some senior Wall Streeters could yet go to jail.

It's riveting, dramatic stuff. But the obsession with freeing research reports from the taint of the investment banking pitch book re-inforces the absurd notion that fund managers were being duped all along by the wicked sell-siders.

That's a complete distortion. Yes, some retail investors may have been mis-led.

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