Independent Research and Blogs: A Quite Modest Proposal

Five years ago, Wall Street and the SEC reached the famous Global Settlement. This came as a result of the conflict of interest between equity research and investment underwriting. The settlement required funding of “independent research.”
The result has been a disaster and few people will admit it. Basically, nobody wants this research. At one point, Goldman’s website got a grand total of 408 unique visitors in one month. That’s just pathetic. The money allocated for state government “education programs” has done even worse. In Georgia, $4.3 million was spent on commercials that were little more than political ads for the incumbent.
While this has been happening, an impressive stock blog culture has blossomed and become a real part of Wall Street. And most of these blogs, like mine, are completely free. If investors want independent research, they now know where to find it.
Here’s my proposal: Instead of wasting money on political ads or over-paid consultants that nobody reads, let’s fund something that’s already working. Each year, the trustees of the of independent research funds should award prizes of, say, $10,000 each, to the best finance bloggers. A committee could decide the awards.
The Global Settlement was for $1.4 billion so I think they could scrape together a little cash to fund some worthy blogs. It would be a small slice of what’s already being spent and it would certainly have a much greater impact on research that is truly independent.

Posted by on February 6th, 2008 at 2:50 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.