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.

After the last meeting, at which a representative of the Securities Industry Association lobbied for self-regulation, Merrill Lynch and Credit Suisse First Boston adopted policies prohibiting analysts from buying into companies they cover. But there is sentiment that legislation is needed to solidify the "Chinese walls" that are supposed to separate equity analysis from investment banking operations.

"For the sake of insuring that the growing number of $200 investors receive the same care as the $200,000 investors, we are proceeding on the careful task of finding an appropriate remedy to the problem of biased and unclear investment research," Baker said in a statement.

Testifying at the hearing will be TheStreet.com's Adam Lashinsky, the SEC's acting chairwoman Laura Unger; Matt Winkler, the editor-in-chief of Bloomberg News; Ron Glantz, a former managing director of Tiger Management and former director of research and chief investment officer at Paine Webber; Charles L. Hill, director of research at Thomson Financial/First Call, and Kei Kianpoor, chief executive at Investars.com. The hearing is to be broadcast on the C-Span public-affairs cable network Tuesday.

"As always, investors need to do their homework and undertake the risks involved," Baker's statement said. "But it's one thing if individual investors know the facts but lose. It's another thing entirely if they are unaware that the 'facts' they've been given have been compromised by investment banking-related or any other conflicts of interest."

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