The Global Analyst Research Settlement was an enforcement agreement reached in the United States on April 28, 2003, between the United States Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (NASD), New York Stock Exchange (NYSE), and ten of the United States's largest investment firms to address issues of conflict of interest within their businesses in relation to recommendations made by financial analyst departments of those firms.
[1] A typical violation addressed by the settlement was the case of CSFB and Salomon Smith Barney, which were alleged to have engaged in inappropriate spinning of "hot" initial public offerings (IPOs) and issued fraudulent research reports in violation of various sections within the Securities Exchange Act of 1934.
As part of the settlement decision published on December 20, 2002, several regulations designed to prevent the abuse stemming from pressure by investment bankers on analysts to provide "favorable" appraisals were instantiated.
Namely, these firms would have to literally insulate their banking and analysis departments from each other physically and with Chinese walls.
Research analysts will also be prohibited from going on pitches and roadshows with bankers during advertising and promotion of IPOs.