The rules Angelides is expected to announce would require the banks to follow guidelines modeled on the recent $1.4- billion settlement with Wall Street firms accused of issuing tainted stock research. Overall, the guidelines would extend to the more than 100 investment banks and affect tens of millions of dollars in underwriting and other business, according to a Reuters report citing an unnamed Treasury office official.
California did at least $170 billion in financing business in 2002 through investment and bond issues. Although specifics on the new rules were not immediately available, the guidelines will go beyond those contained in the deal last month between Wall Street firms and regulators that settled an investigation into conflicts of interests at the investment firms.
Under the terms of the Wall Street settlement:
- financial firms will have to physically separate their research and investment banking departments
- analysts will be barred from pitch meetings with clients to win underwriting business
- interaction between analysts and investment bankers will be chaperoned by compliance officers.
Once released to the state, Angelides is also expected to bring his proposal to the two giant pension funds where he sits on the board of directors: California Public Employees’ Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS).
In his position as both the state treasurer and board member, Angelides has long sought to prod the nation’s first and third biggest public pension funds into adopting reform policies (See A Call to Action ). In March, for example, he unveiled a plan to combine the resources of the two funds to create an office charged with pushing aggressive corporate and market reforms to deal with scandals that have socked investors with huge losses.