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Jody Clarke, 202.331.2252<?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Washington, D.C., July 7—The recent rulings by two federal judges dismissing lawsuits against Merrill Lynch and several other financial firms for allegedly misleading investors with biased research reports should bring more scrutiny to the recent settlement between Wall Street and New York’s state attorney general, according to James Sheehan, an adjunct scholar with the Competitive Enterprise Institute.
“These federal court rulings reveal serious flaws in the $1.4 billion Wall Street research settlement spearheaded by New York state attorney general Eliot Spitzer,” says Sheehan. “The settlement restructured parts of the investment banking industry—and forced brokerage firms to pay substantial sums in fines and restitution—for conduct which a federal court has found not to have been illegal or fraudulent.
In light of the court’s judgment that a collapsing stock market bubble, not analyst conflict of interest, caused investor losses in Internet stocks, the SEC should rescind the Wall Street research settlement and return fine monies in the interest of fairness. Continuation of the settlement potentially gives investors and speculators false security that the legal system will insure them against losses in the stock market.”
Financial Expert Available for Interviews
James Sheehan Adjunct Scholar
Competitive Enterprise Institute
Sheehan specializes in policies concerning trade, finance, and foreign aid. He holds an MBA from Duke University and a BA in international politics from the Catholic University of America.
CEI is a non-profit, non-partisan public policy group dedicated to the principles of free enterprise and limited government. For more information about CEI , please visit our website at www.cei.org.