The recent Wall Street firestorm over claims of conflicts of interest on the part of securities analysts working for investment banks was ignited by the rupture of the tech bubble in March 2000 and the collapse in the price of US technology stocks. The flames were then fuelled by the attorney general of New York state, Eliot Spitzer, asserting the long-established US principle that someone must pay for losses of such magnitude.
In January 2002, after spending six relatively fruitless months investigating Merrill Lynch, Spitzer was handed a file of documents that he claimed demonstrated that Merrills analysts had harboured private doubts about the shares of companies it had publicly recommended to its customers. The reason for this sorry state of affairs, according to Spitzer, was the endemic conflicts of interest that exist between the research and investment banking departments of Wall Street firms.
