Thursday, May 01, 2003

What does a Libertarian say about all this?: Wall Street caves in and agrees to collectively pay out $1.4B in fines for its unethical business practices during the internet boom of the late 90s (right, only during that time). So, a purist libertarian might say that this is so much bushwah...merely a high-handed government ploy to essentially put another tax on the stock market. "Let the market sort this out," the libertarian might continue, "Surely, an informed consumer could decide to not give business to Company A because it touted WorldCom and instead to to Company B, who said to stay with Pepsi." Moreover, the evidence collected is hardly as "damning" as the Connie would have you believe:
The settlement reveals some damning e-mails from Morgan Stanley and Goldman Sachs, hitherto regarded as minor offenders: one Goldman analyst lists his three most important goals for 2000 as “1) Get more investment banking revenue. 2) Get more investment banking revenue. 3) Get more investment banking revenue.” A Morgan Stanley counterpart wrote: “Bottom line, my highest and best use is to help [the bank] win the best internet IPO mandates.” Similarly, at Merrill Lynch, conflicts of interest were not limited to Mr Blodget’s group. One analyst outside the group passed on important, unpublished information about companies to favoured institutional clients. It also appeared to be common practice at Merrill for analysts to send draft research to the companies they covered, seeking feedback on what to write.
The horror! The Goldman analyst wanted to get more banking revenue for the for-profit company by which he was employed! Ahhhh, the system is doomed! Now, the pre-screening of reports is a bit much, but one could certainly say that only if the writer's words are twisted, inaccurately, but the company he is covering, would such a practice be improper. Obviously, separation was needed between the research and the banking sides, but is this the way to go about it? He asked unknowingly...

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