Editor's note: On Friday, the SEC will Webcast an Investor Summit to solicit comments and questions from individual investors. As a walk-up, RealMoney columnist Jim Cramer offers his thoughts on the SEC response to conflict of interest concerns on Wall Street.

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Nothing steams me more than when Washington attempts to regulate Wall Street without the facts at hand. Nothing, that is, except when Wall Street goes to Washington and distorts everything to keep the pols in the dark, and the politicians buy the horse manure being shoveled in their faces.

That's what's happening now with these

bogus rules that the government just put out. They are a joke. Sorry, I wish I could be the diplomat so many people want me to be and say "they are a good first start." But they are a crock and all my myriad buddies from years in the business know it. They all just accept the fact that Washington people are so thickheaded or on the take, through donations or otherwise, that it doesn't take much to buffalo that bunch of jokers.

Which is why it was so great that Eliot Spitzer got involved. Spitzer's not owned by anybody, he's rich and he's been a student of the markets and investments for a good 20 years now. He's informed and smart and he knows the truth: Whoever pays research owns research and research can't pay for itself.

Despite some token restrictions, the SEC rules adopted yesterday won't stop the conflicts or tainted research. If investment banking pays research, then research will be corrupted by the large investment banking clients. If sales pays research, then research will work its butt off to make money for the retail and institutional clients that it is supposed to be working for.

Simple. Clean. Don't get confused. Don't be fooled into thinking an outside advisory board will matter. They will just appoint a bunch of know-nothing stiffs. Don't think that compliance officers matter. Heck, compliance people are paid less money and don't have any power at these places. I know it, I saw it; don't ask me to lie about it.

And don't think that disclosure matters. Unless these analysts come on television and say, "Hey man, I am bought and paid for by (insert any company name here) through investment banking, so don't believe a word I say," I don't give a hoot about disclosure. The media should know better but they either don't care or know these firms pay the bills too, in the form of advertising.

Yeah, it stinks, don't it?

What should be done? Again, simple. Don't let investment banking have anything to do with research. That way, research will be honest. If you aren't willing to do that, just put research under investment banking and say that it acts in concert and see if anybody cares. Let the public make up its own mind. If the research is labeled corrupt but it still makes you money, then so be it. If it is corrupt and nobody uses it, the banks will change it themselves.


We have to stop kidding ourselves. Look, I should never have worked at these places and traded with them. I shouldn't have because I have a propensity to want to tell the truth about what I saw. And until those Blodget

emails, the truth was systematically denied. I always feel like

The Insider

from that terrific movie about the guy who blew the whistle on the tobacco companies because he had seen and heard too much.

Spitzer's right. He may have to give in because the whole shootin' match of a bear market is starting to threaten Wall Street. But expedience stinks. I hope he sticks by his guns.

Dumping perfume on the cesspool -- which is what Washington will do if left to its own devices -- doesn't make me want to drink it.

Enough said.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made.

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