SEC to Vote on Settlement Involving Wall Street Analysts

Thursday, April 24, 2003 01:06 AM ET

WASHINGTON -- The Securities and Exchange Commission is expected to approve a $1.5 billion settlement with 10 Wall Street firms as early as today, people familiar with the matter told The Wall Street Journal.

The settlement with the Wall Street firms stems from a regulatory investigation into whether stock analysts misled investors. Under terms of the settlement disclosed late last year, the firms involved will pay $900 million to federal and state regulators, $85 million for investor education and $450 million to provide customers with independent research. Citigroup Inc.'s (C, news) Salomon Smith Barney unit will pay the single largest amount - $400 million.

The commissioners reviewed the settlement Tuesday and plan to meet today to vote on it, these people said. While the SEC is expected ultimately to approve the settlement, it has become somewhat controversial and commissioners have been debating the structure of the agreement, whether it goes far enough or if it goes too far, said people familiar with the matter. Further details are expected to be made public Monday, assuming the SEC approves the settlement.

Firms that are part of the settlement with the SEC and state regulators won't admit or deny allegations that they issued positive research reports to curry favor with investment-banking clients. But they will have to make independent research available to customers for five years. As part of the settlement, the banks involved have agreed to hire independent contractors who will bring in companies to perform outside research.

Wall Street Journal Staff Reporter Deborah Solomon contributed to this report.