Bismarck, ND – Governor Hoeven announced today that under the terms of a settlement recently reached between securities regulators and Wall Street firms, North Dakota stands to receive approximately $3.8 million dollars upon final acceptance of the terms of the agreement. The settlement results from allegations of conflicts of interest at brokerage firms where research analysts recommended stocks as a result of improper influence from their investment banking divisions.This historic agreement represents the closing of a regrettable chapter in the history of our financial markets, stated Karen Tyler, ND Securities Commissioner. The industry reforms agreed upon in this settlement will provide for more objective research and stronger protection for investors.It is our strong expectation that this settlement will change the way business is done on Wall Street and that, as a result, investors can return to our capital markets with greater confidence, concluded Tyler.In addition to monetary penalties paid to the SEC and the states, Wall Street firms will be required to sever the links between research and investment banking. This includes prohibiting research analysts from receiving compensation for investment banking related activities. Firms will also be required to provide third party independent research to their customers for a period of five years.The agreement also prohibits the allocation of securities in hot IPOs to company executives and directors in order to attract investment banking business – a process known as spinning.
The ten firms involved in the settlement are:Bear, Stearns & CoCredit Suisse First Boston LLCGoldman Sachs & CoLehman Brothers IncJ.P. Morgan Securities, IncMerrill Lynch, Pierce, Fenner & Smith IncMorgan Stanley & CoCitigroup Global Markets Inc. f/k/a Salomon Smith Barney IncUBS Warburg LLCU.S. Bancorp Piper Jaffray Inc