UBS Embraces the Buy Side

But even after the research settlement, a ratings change by a big firm has never lost the potential to move the price of a stock.

UBS is believed to be the first big Wall Street firm to set up a competing research operations. The new buy-side research will be available to all UBS brokerage customers in the U.S. along with the reports compiled by the firm's investment-banking analysts.

Several UBS brokers familiar with the plan say the idea is intriguing, but they aren't sure how much demand there is for a new class of stock research. The brokers say they already consult a wide array of analytical opinions before recommending stocks to their customers.

UBS is rolling out the new research operation as securities regulators are investigating an allegation that at least one UBS employee was involved in improperly providing advance notice of upcoming changes in analyst stock recommendations to traders and hedge funds.

A trader who gets advance notice on a rating change by a big firm often stands to make a quick profit if he or she can place trades before the rest of the market.

The investigation by the Securities and Exchange Commission, first reported by TheStreet.com, is in its early stages. But sources says regulators in the SEC's Washington, D.C., office consider the matter a high priority and believe that multiple traders got an advance work on changes in stock recommendations.

Some sources say that the information was being sold to traders by an unidentified UBS employee. UBS has declined to comment on the investigation.