A typical caricature of an investment banker is an expensively besuited man with a briefcase, Breitling watch and mobile phone, evoking an image of wealth, refinement and arrogance. It's not a man wearing a camel-hair coat and a lot of gaudy jewellery. But perhaps it should be since the business of a banker is akin to that of the stereotypical second-hand car salesman in London's East End. Both banker and car dealer preach quality and respect for the client but both are middlemen, squeezing profit from the two sides of a trade.
Investment banks want both corporates and investors to like them. But if you try to please both sides, you are likely to end up contradicting yourself and getting entangled in conflicts of interest.
That's why institutional investors have long been wary of sell-side research. New York's attorney general Eliot Spitzer may be drawing more forces into his crusade against biased research - he has now shamed the SEC into action. Analysts putting a buy rating on a stock while in private trashing it have set themselves up as easy targets. But there's little new in this, other than that in the late 1990s' bull market retail investors were more prominent than for 30 years, often taking at face value research created for a different audience.