23 August 2014

Wall Street firms suspend participation in analyst surveys

26 February 2014  |  3008 views  |  0 New York Stock Exchange

Eighteen of Wall Street's top banks have agreed to suspend their participation in surveys of analyst sentiment amid concerns that the practice gives high-speed traders an unfair advantage over ordinary investors.

Attorney General Eric Schneiderman has announced interim agreements with prominent firms, including JPMorgan, Citigroup and Goldman Sachs, to stop their practice of cooperating with analyst surveys "administered by certain elite, technologically sophisticated clients", while he conducts an industry wide investigation into early access to analyst sentiment.

The firms have agreed to suspend participation in any survey worldwide that relates to companies listed on US exchanges.

"At my request, these firms have agreed to stop a practice that can offer an advantage to powerful clients at the expense of others," says Attorney General Schneiderman. "Our markets will only be fair and healthy if everyone plays by the same rules, which is why we will continue to take action against those who provide unfair advantages to elite traders at the expense of the rest of us."

The move follows last month's groundbreaking agreement with BlackRock to shutter its analyst survey division and pay a $400,000 bill to cover the costs of the investigation.

The probe into BlackRock's survey revealed that a number of questions were worded to capture analysts' views regarding management, competitive position, earnings, and other aspects of covered companies. The Attorney General's Office determined that the design, timing, and structure of the surveys allowed BlackRock to obtain information from analysts that could be used to front-run future analyst revisions.

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