Hello and thank you for your question.
The best place to find the info you seek is on the SEC's own site, at
http://www.sec.gov/news/press/2003-54.htm
There are links on that page to more detailed information. For
example, in the Goldman Sachs case,
http://www.sec.gov/litigation/litreleases/lr18113.htm
the Commission's Complaint alleges that:
*Goldman Sachs compensated its analysts based at least in part upon
their participation in the firm's investment banking-related
activities. Analysts were required to prepare business plans that
discussed, among other things, what steps the analysts planned to take
to assist investment banking efforts. In preparing these business
plans, analysts were required to answer such questions as "How much of
your time will be devoted to IBD [investment banking division]?" and
"How can you work more effectively with IBD to exploit the
opportunities available to the firm?" In response to the question
"What are the three most important goals for you in 2000?" one analyst
replied, "1. Get more investment banking revenue. 2. Get more
investment banking revenue. 3. Get more investment banking revenue."
*Goldman Sachs "aligned" its research, equities, and investment
banking divisions to work collaboratively in order to fully leverage
its limited research resources. In 2000, Goldman Sachs concluded
internally that "US Investment Research appears to be on the right
track," noting that "research analysts, on 429 different occasions,
solicited 328 transactions in the first 5½ months of [the year]" and
that "[r]esearch was involved in 82% of all `won business'
solicitations."
*Goldman Sachs analysts participated in investment banking marketing
efforts, including working with investment bankers to prepare "pitch"
materials and in some cases attending the pitch meetings. For example,
in an April 2000 e-mail, an investment banker told an analyst that the
company they were about to pitch to "strongly suggested that you guys
come prepared to SELL." Some pitchbooks implicitly suggested that
Goldman Sachs would provide favorable research coverage after the
investment banking transaction.
*In several instances, these conflicts resulted in analysts publishing
recommendations that were exaggerated or unwarranted. For example, in
August 2000, the business unit leader for U.S. telecommunications
research at the firm wrote to his counterpart in Europe: "The plan we
have in place now is that in early September we are going to re-rate
most of the CLECs [competitive local exchange carriers], which is
where the problem is most egregious. The ratings were a residual from
[a former analyst], and I never changed them, not wanting to disrupt
things too much. But it's ridiculous. I've already met with the
bankers, and plan to move most of the companies down to M[arket]
O[utperformer], from RL [the highest rating]. For the other segments
the situation is not as bad, and where there is a problem, investment
banking considerations have prevented me from making a change (i.e.
AT&T, WCOM). I don't think I would end up leaving only 7.5% as RL, but
the present 68% is ridiculous...."
*Goldman Sachs failed to establish and maintain adequate policies,
systems, and procedures reasonably designed to ensure the objectivity
of its published research.
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