Independent Securities Research

The need for independent securities research came about because of both real and imagined problems about the work of in-house securities analysts.

A 2003 settlement imposed by then New York State Attorney General, Eliot Spitzer, provided for so-called independent securities evaluation, as a buffer to what was offered by major brokers, who also underwrote securities. It forced them to spend $460 million for such “independent” research, on behalf of non-institutional clients.

There is doubt, however, about how much such securities research was used. Certainly, some independence was achieved. But few investors made practical use of that source of information.

Yes, it was a political success at the time the settlement was imposed. But that had been the sum of it. And, as I recently noted, fewer analysts are being used now.