Wall Street's Credibility Problem: Misaligned Incentives and Dubious Fixes?

DURING 2001 INVESTORS, politicians, regulatory agencies, and the media voiced a common sentiment: Wall Street has a credibility problem. Specifically, can the investing public trust the research, analysis, and recommendations they receive from Wall Street analysts? At issue are the independence and objectivity of sell-side analysts, a term applied to analysts who work for brokerage firms. 1