No Settlement Seen on Stock Analyst Conflicts

Eliot Spitzer, New York state’s top prosecutor, said there would be no settlement this week with Wall Street firms over conflicts of interest in stock research and recommendations, seen as responsible for billions of dollars in investor losses.

“It’s not going to be this week. That would be a false expectation,” New York State Atty. Gen. Spitzer said on ABC-TV’s “This Week” program. He also criticized Congress, the Bush administration and federal regulators for not taking enough steps to clean up the industry.

His comments came as talks have been underway among Wall Street’s biggest firms, the Securities and Exchange Commission and state regulators to resolve high-profile conflicts of interest in the investment banking industry.

But a recent stir over corporate accounting scandals helped lead to the resignations of SEC Chairman Harvey L. Pitt and William H. Webster, the designated chairman of a newly formed federal accounting oversight panel. Those departures have left investors, lawmakers and others concerned about the effectiveness of federal policing of Wall Street.

“I would prefer that these issues be dealt with by Congress, by the SEC. But they didn’t,” Spitzer said.

Spitzer vowed to help clean up the industry by requiring that firms provide investors access to independent research and recommendations on stocks.

He is presiding over several high-profile cases with Wall Street investment banking firms, including the latest allegations involving the stock ratings of Jack Grubman, the former star analyst at Salomon Smith Barney, a division of Citigroup, on AT&T; Corp.

Though he would not talk specifically about that case, Spitzer said evidence was mounting against many firms, that big fines would be paid and that criminal charges have not been ruled out.