The SEC has lost its bid to scrap a rule established to protect investors after the dot.com implosion. The rule, designed to prevent Wall Street abuses, barred research analysts and investment-banking departments at the same firm from communicating without a lawyer or compliance officer present. The regulator's decision to side with Wall Street firms seeking looser limits surprised many analysts.
"I am all for judges being the hero, but isn't the SEC supposed to be?" a law professor told the Wall Street Journal after a district judge rejected the proposal. "Deconstructing the firewall between research analysts and investment bankers"—which was put into place after thousands of lawsuits from investors who lost out when analysts put forward tainted research to win banking business for their firms—would be "contrary to the public interest," the judge wrote.