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Conflict of Interest between Security Analysts and Investment Bankers

1) Given the potential conflict of interest between Security Analysts, and the Investment Bankers working for the same firm - what are the potential solutions that exist to remedy the situation?

2) Are they ethically bound to work together in the best interest of their clients?

Solution Preview

Interrelated work between security analysts and investment bankers:
From the business point of view work of both security analyst and Investment Banker is interrelated. If investment bankers recommend to a corporate client that stocks and/or bonds be sold to raise capital, then the investment bank will also distribute, market, and sell the securities. Through their analysis and recommendations, security analysts often play a key role in the marketing of new security offerings. In addition, through their contact with corporate senior management, security analysts can also play a significant role in generating new corporate finance clients for the investment banking firm.

The inherent nature of work leading to conflict if both working for same firm:
Security Analysts, and the Investment ...

Solution Summary

The solution discusses the conflict of interest between security analyst and investment bankers.