Zeev's Turnips Patch-No Politics (ZEEV)

[marketmaven]

MS- Scumbag from Scudder- lie cheat steal- No redemption !
What is he? Like Tokyo Joe? No Jonathan Lebed? No Henry Blodgett? Maybe OJ?

VALUE ADDED: Settlement Is a Step in the Right Direction
Kiplinger -by Steven Goldberg 29 Apr 2003
http://www.kiplinger.com/columns/value/archive/2003/va0429.htm

A Merrill Lynch analyst sent a draft of a report on Tyco International to a Tyco executive. "Please review ASAP. I will not send it out until I hear from you first!" the analyst e-mailed. He signed the note, jokingly, "A loyal Tyco employee!" A Goldman Sachs analyst, Craig Kloner, asked to list his goals for 2000, wrote: "1. Get more investment banking revenue. 2. Get more investment banking revenue. 3. Get more investment banking revenue."

In notes for a meeting, John Hoffman, head of global stock research at Salomon Smith Barney, wrote, "Rising issue of research integrity -- Basic inherent conflict between investment banking equities and retail." (Retail is broker-speak for individual investors.) The guilty weren't just a handful of rogue analysts with eight-figure salaries like Merrill's Henry Blodgett, Morgan Stanley's Mary Meeker and Smith Barney's Jack Grubman.

As New York Attorney General Eliot Spitzer put it, "Firms routinely disseminated tainted investment advice that was designed to help investment banking clients but which harmed individual investors." Research analysts worked for investment banking. Period. Investment banking -- bringing companies public, managing secondary offerings, and advising companies in things such as mergers and acquisitions -- paid the freight. Research was slanted to boost clients' stock prices. Research clients, particularly individual investors, were an afterthought, at best.

Indeed, one senior analyst at J.P. Morgan Chase asked to be assigned a junior analyst to write his research reports. He said he was too busy helping the brokerage's investment bankers. "I am trying to remove myself from the day-to-day production of research," he e-mailed. "I actually like doing it, but it's not what you pay me for."

Don't expect lasting effects
The $1.4 billion settlement with ten of the biggest Wall Street firms is a step in the right direction. The countless arbitration cases and lawsuits that are being filed against the firms and their analysts will also help. But most investors can expect to get no more than a pittance if you bought a stock based on dishonest research.

In point of fact, brokerage analysts are so frightened right now of doing anything untoward that today's Wall Street analysis is probably as honest as you'll ever find it. But don't expect that to continue. For one thing, without the big money from investment banking, research budgets are being slashed. More important, the investment culture on Wall Street seems impervious to real change. Scandals such as this one regularly follow every bull market.

Who can you trust?
Under the agreement, the brokerages will be required to provide you with independent research -- probably by firms such as Morningstar, Standard and Poor's and Value Line -- together with any brokerage research they give you. This independent research doesn't have the depth of brokerage research. Independent research analysts cover far more stocks, so they're often stretched thin.

Remember to ask for written research from your broker. Many individual brokers are honest, and most were furious at the bad research they were being fed. Of Grubman, one broker complained in an e-mail: "His ridiculously bullish calls on WCOM (WorldCom) and GX (Global Crossing) cost our clients a lot of money." So read the brokerage analysis, but read it with skepticism -- the way you might have listened to war updates from Mohammed Saeed al-Sahaf, Iraq's former information minister. Pay attention to the buy and sell ratings only of independent researchers. Or go with a brokerage, such as A.G. Edwards, Edward Jones or Raymond James, which does very little investment banking.

The bottom line is that you should use research as a supplement to, rather than a substitute for, your own digging. Examine a company's quarterly and annual reports and read up on recent news, then use research reports to flesh out the picture.