We already know that there’s an extremely high turn-over rate at Forbes.com because of the “sweatshop”-like conditions, but would somebody like to explain the attrition rate of 50% among analysts at Citigroup, Credit Suisse, Goldman Sachs, Lehman Brothers, Merrill Lynch and Morgan Stanley? Surely Dick Fuld isn’t making anyone stitch t-shirts by hand for 16-hours a day as part of his partnership with the Gap. (He knows plenty of less uppity kids in Vietnam).
So what then? Institutional Investor reports that 47-62% of analysts at those firms, who published research in 2003, dropped all coverage by 2006. There was no indication of who switched to other firms, went buyside or retired. The study noted surprise at such steep attrition rates and attributed the highest factors to “commission compression, the sell-side business model changes brought on by the Global Research Settlement, and increased competition for research from the buy-side.” But we want more details—did associates peace because their jobs sucked? Because Lloyd Blankfein was/is too palsy with his employees? Because they wanted to be shepherds? Let’s hear if from the horse(s)’ mouth(s).
50% Of Analysts Dropped Out Since ’03 [Daily ii]

Yeah. We think backanalyzing sounds as dirty as you do.
But not just like that. That’s the backdating-derived name we’ve given to the latest scandal to rock Wall Street some four months after it broke. You probably ignored it the first time around because we sure did. A refresher: it’s the one where a group of academics have accused Thompson Financial of cooking its books—or allowing its books to be cooked by analysts or maybe just being sloppy about keeping the books—to make the calls by analysts seem better than they were. (Some background from DealBook here and here.) We’re not sure why attention has returned to this thing but it has.
Here’s DealBook on the resurged scandal:
We thought it was dead, but the controversy over a widely used database of Wall Street research has popped up again. The debate began last fall when a group of researchers questioned the integrity of Thomson Financial’s I/B/E/S service, a clearinghouse of analysts’ stock picks. The researchers appeared to backtrack after Thomson disputed their methodology, but last month they published the paper and are standing by its conclusions.
“Is it sleazy fraud or inadvertent error?” a headline on Slate asks. “You be the judge.”
In their paper titled “Rewriting History,” professors Alexander Ljungqvist of New York University, Christopher J. Malloy of the London Business School and Felicia C. Marston of the University of Virginia say they found 55,000 changes to the database from 1993 to 2002 that tend to make certain stock analysts look good.
Thompson denies that there is anything wrong with their databases. It’s the researchers who don’t know how to use the tools developed for people in the business.

If analyzed as a whole, all of the data these authors claim is missing is actually present and accessible. The writers of the report clearly had little experience in dealing with Thomson Financial’s system, which is designed for financial professionals.

Translation: Go back to your ivory tower, egg-heads. We here down on the Street have real work to do.

Slate’s Daniel Gross, who first reported on the paper on Tuesday, writes that its hard to tell who to believe. Except that, you know, you probably can’t trust Wall Street. Note how he begins on with a touch of faux-humility before going for the jugular.
It’s hard to know what to conclude. Most of my fellow financial journalists and I aren’t competent to judge the methodology of the academics. Most of my fellow financial journalists and I also routinely, and uncritically, rely on Thomson Financial for data we use in articles.
Wall Street executives—stock analysts among them—have shown that there’s virtually nothing they won’t do, and nobody they won’t corrupt, to advance their own careers and portfolios. Until a few years ago, people would have thought it impossible that a telecom analyst would offer to swap favorable stock recommendations for help in getting a child into preschool. Or that mutual funds would let certain investors trade in and out of their funds after the market closed for guaranteed profits. Or that well-known companies would mislead investors by backdating options for CEOs ensure that compensation that is supposed to be at risk would be guaranteed. And yet, here we are.

Okay, Danny. But until a few years ago, a lot of us never thought well-known financial journalists would generate pseudo-scandals like backdating. Or that politicians would pass irresponsible legislation like Sarbanes-Oxley without much thought about the consequences or costs just to appease a temporary (and largely media generated panic) about corporate corruption. Or that prosecutors would ask courts to impose sentences like the ones we saw come out of the Enron case. And yet, and yet.
The Coming Wall Street Scandal [Slate]
Are Some Stock Analysts Rewriting History? [DealBook]