Research Reform - Has The Worm Turned ?

The Washington Post reports that the combination of the resignation of Harvey Pitt, chairman of the US Securities & Exchange Commission (SEC) and the Republican Party gains in the mid-term elections may 'embolden' Wall Street firms to push back against strong reform of their stock research practices and a global settlement by the industry.

The newspaper quotes an unnamed 'executive at a large brokerage and banking firm', who said: 'My impression it that, with the election results and now with a new and presumably less embattled SEC commissioner coming in, there is a desire among the firms to take a bit of a pause and examine exactly what it is we are agreeing to'.

Morgan Stanley, a firm which has not been subject to the criticisms levelled at rival firms, is known not to want to rush to judgement.

New York state attorney general Eliot Spitzer, however, has other ideas. And word on the street is that he will 'show and tell' if he has not in order to force the pace. The New York Post quotes an unnamed 'source close to the probes', who said: 'If they don't settle, we'll file the case and dump all the evidence.......(the firms) may be feeling like the worm has turned, but they're forgetting one word: evidence....The reason for a global settlement is to resolve the investigations'.

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