Investor Relations in the 21st Century

... Or fencing on a tightrope in the eye of the storm...

After two plus decades on the firing line in Investor Relations I have as many questions now as I did when I started – just different questions. Traders outnumber investors; markets are increasingly fragmented and opaque; technology outpaces regulation, All these trends are transforming the IR landscape today and into the future. RiskRewardNews is where I intend to search for insight and answers. Join me in conversation with market participants, CEOs, CFOs, IROs, academics, regulators, and informed observers as the financial market of the 21st Century takes shape.

Friday, June 22, 2012

US equity commissions drop for third year in succession

Decline sees dollar amount fall to lowest level since 2007



Commissions paid by US institutional investors on domestic equity trades have fallen for the third year in a row, hitting $10.86 bn for the 12 months ending Q1 2012, to reach its lowest level since 2007. The decline has driven down the amount paid for equity research during the same period, from $6.8 bn to $6.2 bn, according to the most recent institutional investor survey by Greenwich Associates.

And the outlook for the coming year is more of the same, Greenwich reports. Approximately a quarter of large institutional investors plan to make ‘significant reductions’ to active domestic equity allocations and 16 percent plan ‘sizable reductions’ in passive US equity allocations by 2014.

Greenwich said several brokerage firms are ‘cutting back on headcount, consolidating trading desks, scaling back coverage and otherwise reducing the level of resources devoted to US equities. Smaller brokers and regional players are feeling the most heat.’

As origninally posted on InsideInvestorRelations.com.

Tuesday, June 12, 2012

Is Best Buy’s leadership crisis overwhelming strategy?

The Minnesota-based electronics retail giant faces challenge to keep investors behind the company



The toughest communications challenges IROs face are born of uncertainty. Keeping the conversation focused on the future during a major financial restructuring, leadership transformation or strategic redefinition when outcomes are still up in the air can tax even the most experienced communications professional.

Add in a very public board split with the founding chairman, the potential threat of a fight over board control or a private tender offer and you have some idea of the communications challenges Minnesota-based electronics retail giant Best Buy faces in keeping investors – not to mention employees, suppliers and customers – aligned with the company.

The fast-developing story has seen plot twists moving quickly from a business restructuring and strategic reorientation story to soap opera and now a looming high-stakes battle for corporate control.

The current drama began in late March with the announcement of a $1.7 bn fourth quarter net loss. Best Buy, with $50 bn in annual sales, has been struggling against competition from price-busting online retailers and has seen its stock price cut in half over the past two years.

(As originally posted on InsideInvestorRelations.com)

Monday, March 26, 2012

STOCK Act passes, ‘political intelligence’ analysts exempt


 As originally posted on Inside Investor Relations.

Congressional staffers, hedge funds and traders will have to be more cautious under new rules



The ban on insider trading by politically connected Capitol Hill players passed the Senate late last week and is now headed to President Obama for certain signature, despite complaints from some early supporters that the current version gives a pass to Wall Street analysts trafficking in market-moving inside information.

The Stop Trading on Congressional Knowledge (STOCK) Act bars members of Congress and their staff from profiting on non-public information obtained through their legislative role.

But a provision put forth by Senator Chuck Grassley requiring ‘political intelligence consultants’ to register as lobbyists was dropped in the final version, which the Senate approved by 96 votes to three.

Grassley, one of the three ‘no’ votes, was quoted in media reports saying: ‘Today’s actions only serve the desires of obscure and powerful Wall Street interests, and undercut the will of the overwhelming majority of Congress.’

Previously, some observers claimed legislators and staffers were immune from insider trading prohibitions, based on a constitutionally protected speech privilege held by members of Congress.

Recently, SEC chairman Mary Schapiro told Inside Investor Relations that the STOCK Act provides ‘a useful clarification’ by eliminating any ambiguity that ‘members of Congress owe a duty to Congress, to the government and to the American people’ to protect material non-public information.

Thursday, March 8, 2012

How insiders trade on congressional information

 As originally posted on InsideInvestorRelations.

The STOCK Act would prohibit members of Congress and their staffers from profiting from non-public information, but it could also hurt companies’ legitimate interests


The recent commotion on Capitol Hill over a ban on insider trading by Congress and staffers has great entertainment value.

The scenario recalls that classic scene in the movie Casablanca when Inspector Renault stuffs his winnings into his pocket as he shuts down Rick’s casino, exclaiming: ‘I'm shocked, shocked to find that gambling is going on in here!’

The Stop Trading on Congressional Knowledge (STOCK) Act – currently stalled while negotiations take place over its content – would prevent members of Congress and their staffers from trading on non-public information gleaned from congressional business.

But some larger questions of particular interest to public companies, and IROs specifically, have been pushed aside in the meantime.

Legal trading on non-public information

The challenge is broader than simple ethical lapses among Capitol Hill insiders or Wall Street traders, though examples of those fill much of the coverage.

Today, IROs whose companies have business interests before Congress might find themselves in the unusual position of seeing their stock trade on material non-public information – all perfectly legally.

Monday, March 5, 2012

CFA Society seeks to cut conflicts in investor conference

As originally posted on Inside Investor Relations.

Society plans conference run by investors ‒ not brokers ‒ this May


In recent years, access to company management has become a highly prized slice of portfolio managers’ commission pie.

As a result, a burgeoning number of sell-side conferences, aggressive institutional sales desks and independent non-deal roadshow organizers have competed fiercely with one another for IROs’ attention and a piece of executives’ calendars.

But the relationship is fraught with potential conflicts as conference invitations and roadshow lineups are often dictated by the potential for trading commission and corporate banking.

Activity has also tended to focus on the coasts and larger money centers, ignoring investors in some middle-market metro areas.

Now the CFA Society of Minnesota is trying to shake up that equation.

‘If I look back, we used to have annual investor conferences sponsored by Dain Rauscher and Piper Jaffray – they were big events locally,’ says Robert Buss, current president of the CFA Society of Minnesota, which boasts a membership of 1,200 investment professionals across the upper Midwest.

InvestMNt to launch

Buss and other colleagues are stepping into the fray, launching InvestMNt, which will bring an estimated 250-300 local institutional investors and 40 public companies together in a day-long conference this year on May 24.

Wednesday, February 15, 2012

Making Fed Poliy Transparent

Kocherlakota’s priority: Federal Reserve transparency

Narayana Kocherlakota
Narayana Kocherlakota describes himself as a “pro-transparency” kind of guy.

In the 28 months since he became president of the Federal Reserve Bank of Minneapolis, the affable former economics professor has given 39 speeches and issued 21 papers or policy statements, far outpacing his predecessor.

As he’s traveled around the sprawling Ninth District,which stretches from Montana and the Dakotas to the Upper Peninsula, he’s been  repeating a common theme: more openness.
He outlines in great detail how the once-secretive central bank sets monetary policy through the Federal Open Market Committee (FOMC) deliberations eight times a year. In his speeches, Kocherlakota describes both the mechanics and the collegiality of that formerly opaque process.

But last summer, he broke with that message.

Tuesday, February 7, 2012

Facebook criticized for all male board

As posted on Inside Investor Relations.

Social network draws ire for lack of female representation on board as it sets off on path to flotation



A message for Mark Zuckerberg: Forget the feature-length movie you didn’t care for, the profiles flattering and otherwise in virtually every business magazine, online scrutiny of your dietary habits and dissection of your college dorm business deals. You’re about to enter the spotlight for real.

When a company undertakes one of the largest IPOs in history, it becomes a vehicle for all sorts of activists, onlookers, observers and commentators (this writer included) to make whatever case he or she deems important.

In fact, it’s already happened. Before the virtual ink was dry on Facebook’s long-anticipated S1 filing, the IPO was described as ‘no friend to women’ because all seven members of the board are men.

‘Outrageous’

‘It’s outrageous that Facebook, representing a new genre of American company, could not find a single woman director,’ writes Malli Gero, principal of 2020 Women on Boards, the Boston-based organization leading a campaign to achieve 20 percent female board representation by the end of the decade.

Citing a Pew Research Center study, Gero says Facebook’s all-male board ignores ‘the fact that a majority of its users are women.’

Friday, January 27, 2012

Social media top dogs


As posted on Inside Investor Relations

 A recent NIRI survey on measuring IR effectiveness revealed that most US IR professionals don’t count Twitter followers or Facebook friends to measure how effective their IR program is.

But there are some players aggressively adopting the new tools of social media and changing the landscape of investor relations. Here, IR magazine profiles four social media ‘top dogs’ and investigates the impact they are having on IR for everyone else.

Tuesday, January 17, 2012

Where next for business ethics?

As posted on Inside Investor Relations.

Study into US business ethics finds mix of improving and worsening factors



The ethical climate in business has never been better by some measures, according to a survey of more than 4,600 employees across organizations around the US.

But the same survey reports ‘ominous warning signs of a potentially significant ethics decline’, leaving careful readers of the 63-page report scratching their head.

On the one hand, misconduct has reached an historic low (45 percent) and around two thirds (65 percent) of those who observed wrongdoing reported those misdeeds, another all-time high, finds the Ethics Resource Center, an Arlington, Virginia-based non-profit, which authored the report.

But two headline-grabbing findings dominated much of the negative press coverage last week. The survey reports that 22 percent of employee whistleblowers felt some form of retaliation, up sharply from 15 percent two years ago.

Friday, January 13, 2012

SEC targets social media scams

As originally posted on Inside Investor Relations.

 Commission charges investment adviser and issues two risk alert bulletins covering securities fraud and social media


The SEC has charged an Illinois-based registered investment adviser with fraudulently offering more than $500 bn in fictitious securities through various social media websites, signaling an aggressive stance by the regulator in monitoring online investment activity.

The charges against Anthony Fields, 54, allege that he used LinkedIn discussions, among other social media sites, to promote fictitious ‘bank guarantees’ and ‘medium-term notes’ resulting in interest from multiple purported potential buyers.

The fictitious securities were allegedly offered through Anthony Fields & Associates and Platinum Securities, both entities founded by Fields who serves as president, chief compliance officer and sole control person, according to the complaint.

The SEC called for a ‘cease and desist’ hearing within 60 days to look into the matter and demanded a response from Fields.

In an earlier letter to the SEC dated last July, Fields denied the allegations, stating that the charges are ‘an attempt to describe me and my character as a spin-off of Dr Jekyll and Mr Hyde, and…  a flagrant attempt to tarnish me and my firms’ reputation and a very opinionated statement.’

Efforts to reach Fields yesterday were unsuccessful.

Investor alerts

The SEC used the occasion of the charges to issue two risk alert bulletins aimed at investors and investment advisers.

Wednesday, January 11, 2012

S&P tool calls earnings surprises

As originally posted on Inside Investor Relations.

Mathematical model ignores analyst track record to draw bead on unexpected results



In the earnings estimate fandango, IROs have long contended with factors beyond their control that can drive trading activity – analysts straying outside of stated guidance, outdated or sloppy estimates, whisper numbers.

Soon, IROs will also face a new mathematical model that promises to identify ‘significant’ – meaning 5 percent or greater – annual earnings surprises 62 percent of the time in the US and 58 percent of the time internationally.

Standard and Poor’s Capital IQ unit has introduced Intelligent Estimate, a new analytical tool that improves on the accuracy of naïve consensus numbers.

It does so by weighting some analysts’ estimates more heavily than others based on several factors, but not by looking at an individual analyst’s previous track record for accuracy.

S&P says its intelligent estimate tool reduces the median fiscal year forecast error by 14 percent in the US and 10 percent internationally.

‘Investment professionals will be provided with a quick snapshot of where earnings surprises are likely to occur so they can position themselves accordingly,’ explains the firm in a statement.

For subscribers only

The catch for IROs is that only companies that subscribe to the service will be able to see when their company is flagged for a potential earnings surprise that may be driving activity in their stock.

Monday, January 9, 2012

Mutual funds up support for political disclosure

As orinially posted on Inside Investor Relations.

Push for greater transparency over political contributions and controls hits eight-year high in 2011, reports study



As the US presidential primary campaign shifts into high gear, a new study reports that mutual funds are increasing their support for greater disclosure and board oversight of corporate political contributions.

The Center for Political Accountability (CPA) reports that votes cast by 40 of the largest US mutual fund firms in 2011 reached an eight-year high of 34 percent in favor of shareholder resolutions focused on corporate political spending.

Mutual fund voting trends
Source: CPA

That is up from only 8 percent support in 2004, the first year CPA studied the issue.

Wednesday, January 4, 2012

ISS policy shift favors disclosure of political spending

As originally posted on Inside Investor Relations.

 Focus on corporate political donations grows as US enters presidential election year



Attention on corporate political spending promises to ratchet up from next month, and it’s not just because the US presidential campaign is swinging into full gear.

Proxy adviser Institutional Shareholder Services (ISS) is changing its policy guidelines in favor of shareholder proposals that call for disclosure and board oversight of contributions to political committees and trade associations.

The new policy, which will go into effect for proxy votes after February 1, moves ISS from a ‘case by case’ approach to recommending that clients ‘generally vote for’ shareholder resolutions on political spending.

Pointing to the controversial landmark Supreme Court ruling that lifted prohibitions on corporate and union contributions to independent committees, ISS spokesperson Ted Allen says the issue has received increasing shareholder attention since the decision.


Thursday, December 22, 2011

Reclaiming Twin Cities money center legacy, with a twist

As originally posted on MinnPost.

“We’ve got a great list of public companies in Minnesota. Anything we can do as a state to publicize that, we should,” said Robert Buss, managing director at Disciplined Growth Investors, an independent investment adviser in Minneapolis with $2 billion under management.

Minnesota is home to more than 490 public companies and boasts more Fortune 500 companies per capita than any other state, according to the CFA Society of Minnesota, an organization representing 1,200 investment professionals across the Upper Midwest.

The Twin Cities metro is also home to 56 institutional asset managers, hedge funds and private equity firms managing an estimated $415 billion. In addition, more than 90 corporate, nonprofit and government pension plans and endowments around the state manage another $210 billion in assets.

So it seemed natural when as president of the Society, Buss and colleagues launched an effort to revive something the financial community hasn’t seen here in some time — a regional conference bringing local public companies together with local investors.

“We felt uniquely positioned to do this,” Buss said.

Wednesday, December 21, 2011

How the money flows

As originally posted on Inside Investor Relations.

Brad Allen asks: what makes one meeting more valuable than another?



What exactly is a meeting with a management team worth to the corporate access team that’s taking you on the road?

Greenwich Associates’ spring 2010 US Equity Investors Study estimates that institutional investors paid about $900 mn for management access at conferences and $1.2 bn for non-deal roadshows between Q1 2009 and Q1 2010.

The Wall St Transcript, which provides software for corporate access programs, used those figures to put an average value of $4,500 on a meeting at an industry conference and $7,500-$10,000 per meeting for a non-deal roadshow.

While those estimates are obviously ballpark, conversations with corporate access providers reveal a broader range and several factors feeding into the actual numbers.

Those who are willing to discuss how the numbers work requested anonymity so as not to tip off the competition and alienate clients.

Tuesday, December 20, 2011

SEC approves NASDAQ free services bundle

As originally posted on Inside Investor Relations.

Commission gives green light to NASDAQ free IR service bundle for new listings and those switching from NYSE



As expected, the SEC has given the go-ahead to NASDAQ’s proposed offering of complimentary IR services worth up to $169,000 a year to newly listed companies and those switching from the NYSE.

The ruling follows approval in August of a rule change at the NYSE allowing up to $100,000 worth of services for all Big Board-listed companies, not just new listings.

As with the NYSE decision, the SEC approved NASDAQ’s free services bundle in light of the ‘competitive environment’ for attracting listings.

‘We’re obviously very pleased,’ says Joe Christinat, spokesperson for NASDAQ. ‘The ruling gives us the chance to showcase our communications, governance and market intelligence offerings.’

Friday, December 16, 2011

Focus on donations grows

As originally posted on Inside Investor Relations & IR Magazine

Scrutiny of political contributions is intensifying as the US enters the next presidential election year



When the US Supreme Court ruled in 2010 that corporate political contributions are protected by free speech, the five-four split-decision signaled deep divisions.

But the court was nearly unanimous in upholding the importance of disclosure to give voters the information necessary to ‘make informed choices in the political marketplace’.

The case – known as Citizens United – has made political contributions a red-hot issue. And the focus on this area is set to intensify in 2012, when the next US presidential election will be held.

Critics of the decision, including President Obama, predict a plague of unintended consequences as unlimited contributions wash unfettered into the electoral process.

There’s no doubt there have been unforeseen consequences. Just ask Minneapolis-based Target, whose $150,000 contribution to the campaign of a conservative Republican in Minnesota’s 2010 governor’s race sparked a national boycott by gay rights groups (see Target practice, below).

Or consider the record number of shareholder resolutions filed this proxy season – more than 75 according to Institutional Shareholder Services (ISS) – that relate to corporate political activity.

Then there is California state treasurer Bill Lockyer, who requested that the state’s pension funds develop governance policies that call for board oversight of corporate political spending.

Ten prominent law school professors took a different route, petitioning the SEC to consider rules requiring public reporting of political contributions.

And then there is Starbucks CEO Howard Schultz, joined by 100 fellow chief executives, pledging to refrain from donating to candidates from either party until Congress and the president address the US’ fiscal mess.

While no single thread links all these developments directly back to Citizens United, it’s clear corporate political activity will be front and center during the coming proxy season, competing with say on pay as a top issue on activists’ governance agendas.

‘Bumper crop’ of shareholder resolutions

Wednesday, December 7, 2011

SEC delays IFRS rule making

As originally posted on Inside Investor Relations.

Commission says it will need a ‘few additional months’ to come up with a final report



‘Ready, set, wait!’ was the message the SEC delivered to US issuers this week concerning the long anticipated guidance on switching to International Financial Reporting Standards (IFRS).

Speaking before the American Institute of Certified Public Accountants (AICPA) meeting in Washington, DC, on Tuesday, the SEC’s chief accountant James Kroeker said commission staff ‘will need a measure of a few additional months time to produce a final report’.

Kroeker said he was open to considering whether to retain US GAAP as the basis for financial reporting in the States.

While he did not specifically mention it, the SEC had floated a hybrid approach at the AICPA conference a year ago called ‘condorsement’.

This approach would allow US companies to retain GAAP while bringing it into line with IFRS over a five to seven year period.

The SEC said it was concerned about the cost and complexity for US companies of adopting or ‘endorsing’ IFRS over GAAP.

Friday, December 2, 2011

Stocks excite despite bond yields

As originally posted on Inside Investor Relations.

Bonds outperformed equities for the 30-year period ending last September for the first time in 150 years



The US financial markets passed two milestones this fall, one that caught headlines for a day and another that went virtually unnoticed, overshadowed by European debt woes and Washington’s political paralysis over the budget deficit.

But IROs may want to take note of how both play on investors’ attitudes toward equities.

The first incident, reported by Bloomberg at the end of October, followed a report from Chicago-based Bianco Research calculating that long-term government bonds have gained 11.5 percent annually for the 30-year period ending last September.

That beat the S&P 500, which averaged 10.8 percent over the same period. Jeremy Siegel, a finance professor at the Wharton School, calculates that fixed income had not outperformed equities over any 30-year period since 1861, reported the Bloomberg article.

The second milestone occurred in November, which saw the expiration date of 30-year and 29-year nine-month treasuries issued in 1981 that carried coupons of 14.1 percent and 14.56 percent, respectively – high watermarks for US long bonds.

With fixed income continuing to outpace stocks so far this year, is equity investing in danger of becoming passé?

Investing in bonds had a great run, but it will be impossible to make 6 percent in the future, believes financial adviser Simon Lack, a former JPMorgan fixed income trader.

The best an investor can hope for is 2 percent on treasuries and 4 percent in high-grade corporate debt, he tells Inside Investor Relations.

Tuesday, November 29, 2011

Roche on the road

As originally posted on Inside Investor Relations.

The pharmaceutical giant mixes up institutional and retail targeting while on the road in the US


Nina Goworek, an IR officer for Roche, is on the road several days a month explaining the Swiss-based pharmaceutical giant to US institutional investors in money centers across North America. But, at the same time, the IR effort is not overlooking individual investors.

‘As times are getting tougher, a lot of companies are focusing on institutional investors,’ Goworek observes after a presentation to a CFA society luncheon in Minneapolis. ‘But we think it’s important’ to also reach out to retail investors, she adds.

Goworek joined Roche in 2008 specifically to become part of the US-based IR team, after four years as an IR analyst at Schering Plough.

With an undergraduate degree in finance from Rutgers University, she was brought on board specifically to take the message beyond the tier one institutions to financial advisors, smaller institutions, private wealth managers and high net worth individuals.

Her company benefits from targeting individuals because they tend to be longer-term investors, and it also helps to diversify the shareholder base, she explains.

As part of the outreach effort, Goworek reaches out to retail investor groups such as the American Association of Individual Investors, regional retail investor conferences such as The Money Show, and some advertising in investment magazines such as Better Investing, Kiplinger and Research Magazine.

Brand advocate

Friday, November 18, 2011

Independent research on the wane

As originally posted on Inside Investor Relations.

Start-ups at lowest level in two decades


Only 44 new independent research houses started in 2010, the lowest level of start-ups since the early 1990s, according to Integrity Research, a firm that follows research industry trends on behalf of buy-side clients.

‘We are in a new era,’ writes Sanford Bragg, CEO of Integrity Research, in a note to clients issued this morning. ‘A decade ago, being independent from investment banks was a positive in the eyes of regulators and investors. Now independents are viewed as unregulated entities that generate risk.’

Singling out the taint caused by Primary Global, the expert network provider caught up in recent insider trading scandals, is too simplistic an explanation for the fading luster of independent research, Bragg says: ‘The causes are much deeper and they aren’t going away.’

Monday, October 31, 2011

Companies rethink corporate political donations

As originally posted on Inside Investor Relations.

Disclosure of political expenditure becoming mainstream practice, according to new study


Less than two years after a landmark US Supreme Court ruling removed barriers to ‘electioneering activity’ by corporations and unions, a handful of the largest US companies seem to be saying No, thanks.

A survey of practices at the S&P 100 reveals that two dozen of the largest US corporations have publicly opted out of political spending funneled through independent committees, as allowed by the Supreme Court Citizens United decision.

Independent committees are also known as 527 organizations, named after the Internal Revenue Code section that defines them.

In addition, 57 out of 100 companies surveyed voluntarily report their political expenditures and have instituted policies including board oversight over those expenditures, while 43 provide information about their political spending channeled through independent committees and trade associations.

These are among the key findings released recently by the Washington, DC-based non-profit Center for Political Accountability (CPA) and the Carol and Lawrence Zicklin Center for Business Ethics Research at the Wharton School of Business.

The CPA-Zicklin Index of Corporate Political Disclosure and Accountability indicates that ‘disclosure is becoming a mainstream practice,’ says CPA founder and president Bruce Freed.

Thursday, October 20, 2011

Investors fret over EU and China

As originally posted on Inside Investor Relations.

 Cash levels rise as investors see risk in European sovereign debt and a cooling Chinese real estate market



Investors remain in a cautious mood as European sovereign debt and Chinese growth expectations weigh on their minds, according to a new survey by Bank of America Merrill Lynch (BofAML).

Fully 85 percent of fund managers surveyed by the bank expect Greece to default on its debt, with the majority expecting default to occur by the first half of next year.

The largest source of anxiety for an abnormally large negative event – or ‘tail risk’ – comes from European sovereign debt funding, with 60 percent of respondents expressing concern.

The next biggest risks, according to investors, come from a cooling Chinese real estate market (15 percent)

Thursday, October 13, 2011

What does institutional sales bring to the buy side?

As originally posted on Inside Investor Relations.

New survey highlights additional services and information from sales that can be harvested by IR



Experienced IROs know the best institutional sales reps can be a valuable source of information and a conduit to key shareholders and prospects.

Now a new survey from Institutional Investor ranks the sell-side sales teams for the first time, piggybacking on the magazine’s well-known survey that ranks sell-side research analysts.

The inaugural All-America Sales Team ranking lifts a curtain on some key issues for IROs: how important is the sell-side institutional sales force, and how can you leverage those covering your key shareholders and targets?

A quick read of the survey highlights three takeaways for IROs:

Monday, October 3, 2011

Out of commission

As originally appeared in IR Magazine and posted on Inside Investor Relations.

Brad Allen ponders the future of the sell side after a further drop in commission payments


It’s just not the same, being on the sell side. Over the past decade experienced analysts have retired, struck out on their own to launch independent research boutiques, started hedge funds and become IROs. There’s a familiar litany of events that changed the landscape of sell-side research forever: Reg FD leveled the playing field; decimalization accelerated the commission squeeze; Eliot Spitzer’s post-tech bubble Global Research Analyst Settlement slammed shut the pay door between research and investment banking; the internet, social media and increased compliance scrutiny narrowed the scope of the analyst’s role.

As it scrambled for a new and sustainable business model, Wall Street took a dose of the medicine it often prescribed for the companies it analyzes – outsourcing – as it pushed labor-intensive number crunching to low-cost locales such as India, Malaysia and the Philippines.

Then, just as things seemed to be settling into a new normal, the market meltdown of 2008 once again sent the Street scrambling for solid footing. With trading volume off, new rounds of downsizings hit research departments. So the recent Greenwich Associates client survey reporting an ‘unexpected’ 12 percent drop in commissions paid on US equity trades instead of an anticipated 15 percent gain in the first quarter of 2011 seemed to be just one more hit to an already beaten-down sell side.

It also kept alive the question: is the sell side headed for, if not extinction, then irrelevance?

Old dogs, new tricks

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