Tuesday, April 29, 2003

Wall St. Firms to Pay $1.4B in SEC Deal

Wall St. Firms to Pay $1.4B, Change Practices in SEC Deal Over Alleged Misleading of Investors By Marcy Gordon, AP Business Writer, WASHINGTON (AP) -- In a bid to restore investor confidence, regulators are forcing some of Wall Street's largest brokerage firms to alter their research practices and to pay a $1.4 billion settlement. The deal announced Monday with the 10 firms comes after more than a year of regulatory probes that found analysts misled investors with stock picks designed to win the firm company investment banking business ... The 10 brokerage firms will have to sever the links between financial analysts' research and investment banking, pay a total of $432.5 million over five years for independent stock research for their customers, and fund an $80 million investor education program. A fund of $387.5 million will be set up to compensate customers of the ten firms; $487.5 million in fines will go to states according to their population. Much of the evidence consists of e-mails in which analysts derided stocks they were publicly recommending and discussed the pursuit of banking fees.

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