On April 28, 2003, NASD, the U.S. Securities and Exchange Commission (SEC), the New York Stock Exchange (NYSE), the National Association of State Securities Administrators (NASAA), and the New York State Attorney General announced the final terms of the Global Settlement of Conflicts of Interest Between Research and Investment Banking (Global Settlement).
The Global Settlement followed joint investigations by the regulators into alleged conflicts of interest between investment banking and securities research at brokerage firms.
As a result of the investigation, ten of the nation's top investment firms agreed to pay $1.4 billion - $387.5 million of it in restitution to be returned to harmed investors through a process overseen by the SEC, and $487.5 million in penalties. Funds have also been earmarked for investor education and to help pay for independent research for investors. The firms have also agreed to reforms in the way they do business to help prevent these conflicts in the future.
Following are links to information about the Global Settlement.
Distribution Fund information from the SEC:
The SEC has provided preliminary information regarding the Distribution Funds that will be established as a result of the Global Settlement. Investors with questions about how the Distribution Funds will work are encouraged to review this information.
The Global Settlement expressly provides that investors who are eligible to receive payments from the Distribution Funds are not precluded from seeking other remedies, including arbitration and mediation.
- SEC News Release: Federal Court Approves Settlement of SEC Enforcement Actions Involving Conflicts of Interest Between Research and Investment Banking (October 31, 2003)
- SEC News Release: Statement of the Commission Regarding Distribution Funds from the Global Settlement (May 12, 2003)
- Joint News Release: Ten of Nation's Top Investment Firms Settle Enforcement Actions Involving Conflicts of Interest Between Research and Investment Banking (April 28, 2003)
Speeches and Testimony:
- Testimony by NASD Chairman and CEO Robert R. Glauber Before the United States Senate Committee on Banking, Housing and Urban Affairs (May 7, 2003)
- Statement by NASD Chairman and CEO Robert R. Glauber at the Final Global Settlement Press Conference (April 28, 2003)
Letters of Acceptance, Waiver and Consent and Offers of Settlement resulting from the Global Settlement are available to the public upon request. For convenience, NASD makes these documents available in electronic form. If you would like to view one of these documents, please click on the appropriate link below.
Letters of Acceptance, Waiver and Consent
- Citigroup Global Markets Inc., formerly known as Salomon Smith Barney Inc.
- Jack Benjamin Grubman
- Merrill Lynch, Pierce, Fenner & Smith Inc.
- Henry McKelvey Blodget
- Credit Suisse First Boston LLC
- U.S. Bancorp Piper Jaffray Inc.
- Bear, Stearns & Co. Inc.
- Goldman, Sachs & Co.
- J.P. Morgan Securities Inc.
- Lehman Brothers Inc.
- Morgan Stanley & Co. Inc.
- UBS Warburg LLC
Offer of Settlement
Additional information provided by the Office of the New York State Attorney General, Investor Protection Bureau.