UBS Embraces the Buy Side

UBS (UBS Quote) is looking to create some internal competition when it comes to stock research.

The New York-based brokerage arm of the Swiss financial-services giant is putting together its own team of analysts to come up with a list of stock tips and recommendations, sources say. The new research team, which could be announced as soon as next week, will consist of between 10 and 20 analysts.

People familiar with the concept say the new team of analysts will operate much like the so-called buy-side stock researchers who work at big mutual funds.

Buy-side analysts assist mutual fund portfolio managers in coming up with investment ideas. Similarly, this new crew of analysts at UBS will help brokers come up with independent investment ideas for their customers.

A UBS spokeswoman declined to comment on the new research operation.

In theory, the new group of analysts could come up with different recommendations on stocks than the large crop of so-called sell side analysts already working for UBS's investment bank. In compiling their recommendations, the buy side analysts will also consider research recommendations from analysts at other Wall Street firms, sources say.

Sell-side stock research got a black eye three years ago, when 10 big Wall Street firms, including UBS, paid $1.4 billion in fines to settle allegations that research analysts conspired with investment bankers to issue favorable ratings on stocks. The quality of sell-side research has improved since the settlement with UBS, Citigroup(C Quote), Merrill Lynch(MER Quote), Lehman Brothers(LEH Quote) and Goldman Sachs(GS Quote). Still, many on Wall Street still view it as being less than independent advice.