Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Fool Blog: Wall Street Can Be Trusted

Goldman Sachs (NYSE: GS  ) is suspected of aiding in the fall of Bear Stearns, and yet, one-time dot-com superstar Frank Quattrone says that Wall Street can be trusted.

"I think the industry should petition to remove the Spitzer initiative," Quattrone reportedly told attendees of a conference for start-ups held this week at Stanford University. "It hurts the competitiveness of our country to deny companies access to research analysts."

Access to research analysts? Sigh.

Quattrone is referring to a ruling that prohibits Wall Street's analysts from getting too cozy with bankers. The thinking, if I'm reading Quattrone correctly, is that investment banks need to be able to offer semi-legit research to IPO clients so as to grease the market for soon-to-be offered shares.

OK, so Quattrone wouldn't call the practice "semi-legit." I would because, well, we know that it usually is. Credit Suisse (NYSE: CS  ) , Deutsche Bank (NYSE: DB  ) , JPMorgan Chase (NYSE: JPM  ) , Lehman Brothers (NYSE: LEH  ) , and Morgan Stanley (NYSE: MS  ) are among those to have settled conflict-of-interest charges for $1.4 billion in 2002.

That's what makes this (ahem) sell-side analyst pledge so darn funny. Humor works best when it's doused in truth. We're supposed to believe that, now that analysts have been in the wilderness for a few years, it's OK to invite them back to Wall and Broad's gilded halls with a backslap and a whiskey sour?

What really burns me about Quattrone's argument is that he's relying on half-truths to make his point. The U.S. IPO market was bone-dry in the second quarter; not one venture-backed firm came public during that time, exasperating the venture capital crowd from whose backyard Quattrone was speaking.

Never mind the rotten economy or the impact of the Sarbanes-Oxley requirements for public firms; the death of the IPO is Eliot Spitzer's fault.

Then again, maybe Quattrone's right. He is, after all, an insider who rejoined the world of start-up finance by opening his own firm in March. He'd never lean on moral outrage just to win new business. Wall Street can be trusted, remember?

Get your clicks with more bloggy Foolishness:

JPMorgan Chase is an Income Investor recommendation. Try this market-beating service free for 30 days. There's no obligation to subscribe. contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. He's also a member of the Rule Breakers team. The Motley Fool's disclosure policy would be huge at blogging if it had hands and knew how to type.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 693145, ~/Articles/ArticleHandler.aspx, 10/22/2016 3:05:13 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 5 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:02 PM
CS $13.70 Down -0.07 -0.51%
Credit Suisse Grou… CAPS Rating: ***
DB $14.31 Down -0.06 -0.42%
Deutsche Bank CAPS Rating: **
GS $174.67 Up +0.16 +0.09%
Goldman Sachs CAPS Rating: ***
JPM $68.49 Up +0.23 +0.34%
JPMorgan Chase CAPS Rating: ****
LEH $0.13 Down +0.00 +0.00%
Lehman Brothers Ho… CAPS Rating: *
MS $33.44 Up +0.54 +1.64%
Morgan Stanley CAPS Rating: ****