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It’s well known that analysts rarely put sell ratings on the stocks they cover. Typically, the explanation for this is that banks don’t want to jeopardize their investment banking business.
The reality is much more complicated. Skeptics and whistle-blowers risk huge career costs that go beyond conflicts of interest. Investors think they want unvarnished advice, but many don’t truly appreciate it. Most banks don’t want employees to play detective. Regulators abandon whistle-blowers, acting tardily and ineffectually.
After he was fired, Mr. Maris found that other big banks didn’t want to hire him for research jobs. Even some institutional investors and hedge funds, which one might imagine would appreciate a skeptical voice, wanted no part of him. Many investors think an analyst who is picking fights with companies is a glory hound, and the last thing they want is publicity.
But because Mr. Maris is willing to be publicly negative on stocks, he continues to face obstacles. He is prevented from asking questions on conference calls. Companies don’t allow him to bring clients on visits. Some clients seem concerned about the lawsuits in his past.
“If you asked me what’s my advice for a young analyst who wants to be in business for a long time, I wouldn’t tell them to follow the path I went,” he says. On Wall Street, “everyone knows you play ball or live with the consequences.”
http://dealbook.nytimes.com/2011/06/01/for-one-whistle-blower-no-good-deed-goes-unpunished/
The reality is much more complicated. Skeptics and whistle-blowers risk huge career costs that go beyond conflicts of interest. Investors think they want unvarnished advice, but many don’t truly appreciate it. Most banks don’t want employees to play detective. Regulators abandon whistle-blowers, acting tardily and ineffectually.
After he was fired, Mr. Maris found that other big banks didn’t want to hire him for research jobs. Even some institutional investors and hedge funds, which one might imagine would appreciate a skeptical voice, wanted no part of him. Many investors think an analyst who is picking fights with companies is a glory hound, and the last thing they want is publicity.
But because Mr. Maris is willing to be publicly negative on stocks, he continues to face obstacles. He is prevented from asking questions on conference calls. Companies don’t allow him to bring clients on visits. Some clients seem concerned about the lawsuits in his past.
“If you asked me what’s my advice for a young analyst who wants to be in business for a long time, I wouldn’t tell them to follow the path I went,” he says. On Wall Street, “everyone knows you play ball or live with the consequences.”
http://dealbook.nytimes.com/2011/06/01/for-one-whistle-blower-no-good-deed-goes-unpunished/