Frank Quattrone, former superstar technology shill investment banker (who didn't actually say those words in the title of this post, our lawyer advised us to write - ed.), is a bit miffed that investment banks aren't given carte blanche to totally whore themselves to their clients at the expense of you, the investing public.

Perhaps not surprisingly for someone who was a focal point of regulators' reaction to the excesses of the dot-com boom, Quattrone spoke out at the conference against one of the landmark regulatory reforms of the subsequent bust. The reform that drew his ire was the one that bars so-called sell-side analysts from getting a commission when their investment bank sponsors a public offering.

As the article notes

The reform was an attempt to address a basic conflict of interest for such analysts. On the one hand, they are ostensibly supposed to be offering their honest assessment of a stock's prospects. But, if they are paid based on the success of that stock in the market, they have an incentive to be more optimistic about the stock than they might otherwise be.

That reform came in response to revelations that analysts such as Merrill Lynch's Henry Blodget and Citigroup's Jack Grubman were publicly promoting stocks that they privately disparaged.

Actually, reforms came because Wall Street is a conflict-ridden whorehouse at the best of times, and the conflicts became so egregiously blatant during the Tech Bubble that Congress had to do something after the public lost a trillion dollars while guys like Quattrone made out like bandits, pocketing tens of millions of dollars.

But the result has been that a large number of analysts have left investment banks to join hedge funds and private equity firms, Quattrone said.

Oh, I'm sure a few analysts left because they could no longer be a shrill for management to pump their inflated stock options, but the real reason why most have left the Street is because a.) there was a bear market after the investment banks ripped the faces off both retail and large institutions during The Bubble, b.) trading costs for large institutions are down to a penny per share, and c.) there is more money in private equity and hedge funds without all the traveling and dealing with moody and demanding portfolio managers.

"You've taken two [emphasis added] research analysts that might [emphasis added] have told untruths and turned it into an industrywide witch hunt," Quattrone charged.

No, the so-called industry-wide "witch hunt" occurred because investment banks proffered investment advice that was thought to be objective and unbiased, when in fact, Wall Street was pumping stocks to get lucrative investment banking fees, paid for by you, the investing public. 

From a strict legal sense, perhaps only "two" research analysts "might" have told untruths, but when people entrust their life savings with someone whom they believe is an objective and unbiased financial adviser, and that financial adviser who is supposed to be acting in the best interest of the client is pushing a stock for which the investment firm has received a ton money to flog, and that stock then collapses, and this happens on a repeated, massive scale, investors are rightfully going to want to clean up a system which bestows multi-million dollar pay packets on insiders at the expense of everybody else. 

No surprise that the insiders want the gravy train to keep rolling.

Via Dealbreaker.