Congress Revisits the Street's Dark Side

A second round of congressional hearings starts today into the effects of the tangled and sometimes hidden relationships among Wall Street analysts and investment bankers.

The House Financial Services subcommittee on capital markets will hold the hearing, the second since June 14, centered on Wall Street practices. The subcommittee, chaired by Rep. Richard H. Baker, (R., La.), is aiming at the relationship between firms' investment banking activities and their stock recommendations and ratings as well as press coverage of the relationships.

Wall Street's research analysts have come under increasing scrutiny from a number of sources, including the Securities and Exchange Commission, the National Association of Securities Dealers and individual investors -- many of whom followed analysts' recommendations and paid dearly for it. Recently Merrill Lynch settled a suit for $400,000 with a former client who claimed to have suffered heavy losses due to overly bullish calls from the firm's big-shot Internet analyst Henry Blodget. ...