ABC News – For more than a decade, Tom Berquist enjoyed life as a software analyst at Goldman Sachs and then Citigroup, delving into the latest technology and rubbing elbows with the executives ofnew, fast-growing firms.
But next month Berquist joins the exodus of Wall Street’s sell-side analysts when he moves to a small software company himself, becoming chief financial officer of closely held Ingres Corp.
The reason? Mountains of red tape imposed by the government in the wake of the Internet bubble, which he says limited his ability to gather information from small companies that were thinking of going public with an initial stock offering.
“If you wanted to have a discussion about a transaction, you had to have lawyers present,” Berquist, 41, told Reuters. “I miss that contact with all the innovation leaders.”
Those remaining on Wall Street, however, must endure the new rules, which were imposed to stop analysts touting companies and transactions they didn’t believe in to curry favor with investment banking clients in return for generous fees.
New York Attorney General Eliot Spitzer and the Securities and Exchange Commission struck a $1.4 billion settlement with the ten largest Wall Street firms in 2002. Among other things, the reforms restrict talk between analysts and bankers and ended the practice of tying an analyst’s pay to his contributions to banking activity.
Yet while Wall Street cleaned up its stock research ways  as evidenced by the increased number of “sell ratings” and reduction in “buys”  the global research settlement and other regulatory efforts have had unintended and unappealing consequences.
