Regulatory Analyst Settlement and Arbitration Impact, $1.4 billion

Expectations have been raised by the media, claimants’ counsel and other pundits that a flood of arbitration filings will follow the conclusion of the $1.4 billion regulatory settlement regarding analyst conflicts.


RESEARCH SETTLEMENT & ARBITRATION IMPACT:

Expectations have been raised by media, Claimant’s counsel and other pundits that a flood of arbitration filings will follow the conclusion of the $1.4 billion regulatory settlement regarding analyst conflicts.

Acknowledging these predictions in an article appearing in the April 21 Wall Street Letter, NASD’s Linda D. Fienberg is quoted as stating that “’Lawyers for investors are waiting for the settlement to be completed. And they’re waiting to review the documents that will be public once the settlement is concluded.’” Filings are already up about 24% in the first quarter of 2003, versus 2002’s first quarter, and only about 100 of those 2,266 new filings (see SAA 03-15) involve complaints against analysts.

The huge settlement, to which ten major broker-dealers signed on, is the subject of a Joint Press Release issued on Monday (4/28) and has been widely covered in the mass media. The Release appears in full on the SEC’s WebSite, www.sec.gov/news/press/2003-54.htm.

In addition to the roadmap that the settlement descriptions provide for each broker-dealer and underwriting client, the regulators collected a mass of documentary evidence from the settling firms. These are the “documents” to which Ms. Fienberg alluded and, to the extent they are probative, arbitration practitioners can be expected to use these materials to formulate and present their cases.

Attached to a Press Release on the New York Attorney General’s WebSite (which is modestly sub-titled “Settlements Part of Spitzer-Inspired ‘Global Resolution’ of Wall Street Investigations,”) are Exhibit Volumes relating to the NYAG’s investigation of Citigroup, Jack Grubman, and Morgan Stanley (www.oag.state.ny.us/press/2003/apr/apr28a_03.html). The Release itself quotes Mr. Spitzer as saying that “evidence uncovered in these investigations is being placed in the public domain to empower individual investors to recover funds that may be owed to them.”) (SAC Ref. No. 03-17-01)

 

 


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