Why Wall St. fights to keep research; Giants fear small firms will benefit.(Brief Article)

Crain's New York Business, May, 2002 by Gandel, Stephen

Wall Street's biggest firms are stubbornly resisting efforts to make them separate their research operations from investment banking, because they fear such a move will favor smaller competitors and cost them hundreds of millions of dollars in deals annually. Without the lure of research, investment banking units at securities firms like Merrill Lynch & Co.

would have fewer advantages over small rivals, which once commanded a far larger share of deal work than they do today. The huge cost of research would no longer be paid for by investment banking, and commissions on the retail and institutional stock business are not large enough to subsidize the expense. ``Having to separate their research departments would definitely hurt all of the large firms,'' says...

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