A securities regulator is looking into meetings between stock analysts and companies pursuing initial public offerings, according to a person familiar with the inquiry. Discussions have long generated concerns about conflicts or inappropriate financial pressure on analysts whose research can be followed by investors.
The enforcement division of the Financial Industry Regulatory Authority sent information requests to a handful of securities firms, according to this person, who said the inquiry is ongoing.
The focus is on pre-IPO meetings, the person said. At these meetings, analysts who work for banks meet with company executives who are interviewing the banks to potentially underwrite their public offerings.
The New York Times reported the inquiry on Sunday.
At issue with analysts and IPOs is the independence of analysts’ stock research. A decade ago, 10 of the largest Wall Street investment banks struck an agreement with then-New York Attorney General Eliot Spitzer and other regulators requiring them to better separate their research and banking businesses.
Spitzer had alleged that some analysts hyped up dot-com companies that were going public that the analysts did not believe were good investments. The banks didn’t admit or deny wrongdoing.
