Top 2007 Research Stories That DIDN'T Take Place


New York, NY – Yesterday Integrity wrote a blog outlining the top 10 stories that impacted the investment research industry in 2007.  However, we must admit that there were a few notable industry developments that should have occured last year, but didn’t.  The following is a quick recap of these stories.

Alternative Research Consolidation

In the past few years, the team at Integrity Research Associates has expected to see a period of significant consolidation in the alternative research industry as growing competion, the soft dollar chill, and the changing research tastes of the buy-side prompt many firms to seek merger opportunities with other research firms, or shutter their doors altogether.

However, the paltry number of firms that have exited the business in recent years have been greatly outpaced by the number of new alternative research firms that have entered the business.  Consequently, the absolute number of alternative investment research firms in business today remains higher than it was 5 years ago.

Commission Transparency

The most obvious story that didn’t take place in 2007 (nor did it take place in 2006) was a Security and Exchange Commission proposal mandating that buy-side disclose how it spent commissions to pension fund clients.  

Upon releasing its Interpretive Guidance in July, 2006, the SEC noted that it expected to have such a proposal out for market comment by the end of 2006.  Now, here we are 18 months later, and the SEC doesn’t seem to be any closer to offering a workable proposal.

In the past, industry participants consistently made the argument that it either could not provide this data, or this data would create mass confusion on behalf of clients who received it.  However, these arguments hold little water today as the UK’s Financial Services Authority mandated such disclosure in January of 2006, with little ill effect.

What is clear is the SEC’s limited effort on the commission transparency issue reveals the strength of the Mutual Fund and Securities Industry lobbies, and the lack of political will the commission has to take on the financial industry. 

It is also clear to us that the SEC doesn’t really want to provide investors with the minimal amount of information necessary to make good decisions regarding which investment managers are effectively client assets wisely.


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