Goldman Sachs Group Inc, which employs 300 analysts covering 2,000 stocks, said its researchers shouldn't be held responsible for their stock picks.
Goldman told the Securities and Exchange Commission that its research reports often don't reflect the views of the analysts who write them because supervisors review their work and sometimes change it. The securities firm is among a dozen being investigated by regulators and Congress examining whether analysts recommended stocks to win investment-banking business.
The third-largest US brokerage is asking the agency to alter a proposal that would require analysts to certify the integrity of their research. The rule is part of SEC Chairman Harvey Pitt's effort to boost investor confidence after accounting scandals at Enron Corp and WorldCom Inc.
"It's an awkward time for Goldman to raise these issues," Southern Methodist University law professor Alan Bromberg said.
"But it's their chance to make reasonable points and try to influence a rule. And it puts the SEC on notice about the defense Goldman would offer if any of their analysts are charged."
In a Sept. 23 letter to the SEC, Goldman General Counsel John W. Curtis said analysts' work is subject to review by supervisors and ratings review or stock selection committees.
The certification "of personal views" doesn't take into account the "fact that the firm may legitimately influence the views of the analyst in a report," Curtis wrote.
"It may be that the research report which the firm clears for publication does not reflect the analyst's own unreviewed `personal views,'" he said.
The SEC proposal should be changed to make analysts certify their work ``subject to supervision policies of the broker or dealer applicable to all research published by it,'' he said.
Goldman's position contrasts with three rivals, all of whom also are under SEC investigation. Citigroup Inc.'s Salomon Smith Barney, Merrill Lynch & Co. and Credit Suisse First Boston have endorsed the proposal, according to letters filed with the SEC.
Salomon has already put the rule in place and the two others said they intend to do so.
Salomon General Counsel Marcy Engel said in a Sept. 27 letter to the agency that supervision of analysts shouldn't prevent researchers from certifying the accuracy of reports.
"The analyst can properly certify that the research report accurately reflects his or her views, even if those views have changed as part of the supervisory process," Engel wrote.
Congress, the SEC and state regulators, including New York Attorney General Eliot Spitzer, are probing whether brokerages promoted shares of clients and gave executives initial public offering shares to win investment-banking fees.
"Our letter is a legitimate response on the merits to an important proposal, and has no bearing on the SEC's investigations," said Goldman's Lucas van Praag.
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