WASHINGTON - Unimpressed with a set of voluntary guidelines for ensuring the integrity of equity analysts, key lawmakers used a humid Wednesday afternoon to usher in a long, hot summer for the investment banking industry.

A series of congressional hearings into conflicts of interest on the part of the influential stock-pickers at investment firms could result in increased reporting requirements for the industry, said Rep. Richard H. Baker, R-La., chairman of the House Financial Services Committee's capital markets panel.

Accompanied by Rep. Michael G. Oxley, R-Ohio, chairman of the full committee, Mr. Baker said in a press conference that the voluntary guidelines issued by the Securities Industry Association on Tuesday do not go far enough.

The initiative lays out a number of voluntary "best practices" for the industry that would eliminate real and potential conflicts of interest for equity analysts, primarily by detaching their compensation from their employers' investment banking deals and by requiring more disclosure of their own financial interests in the stocks they follow.

The guidelines have no legal force and, particularly troublesome to Rep. Baker, have no method for verifying compliance. "It is not the remedy that will satisfy the criteria of the committee," he said.

Rep. Oxley, who as chairman drives the committee's legislative agenda, was not willing to dismiss the guidelines entirely. "We would expect that those voluntary guidelines are perhaps an opening gambit but certainly not the end of the process," he said.

The "process" he referred to will apparently include at least three hearings - the first of which is scheduled for today - into widespread allegations that equity analysts regularly issue misleading guidance to investors so that their firms can win lucrative investment banking contracts from grateful companies.

An SIA spokesman defended the group's proposal.

"This is a watershed, endorsed by the entire industry, including the CEOs of the top 14 underwriting firms," he said. "Putting the client first is the core principle governing our industry. That principle, coupled with the fact that the industry is highly competitive, will ensure that brokerage firms abide by the highest professional standards in all aspects of their business, including research. We encourage Congress to allow sufficient time for the best practices to be tested."Both lawmakers insisted that they are not seeking a legislative solution to the problem and would prefer to see self-regulatory initiatives put in place by industry. "It ought to be market-driven reform and not legislative or regulatory reform, and I am confident that the industry has the ability and the necessary tools to make that happen," said Rep. Oxley. "Our job is to keep an eye on them and make sure that's the case."

Rep. Baker said any industry-led effort, while it might resemble the guidelines put forward by the SIA, must have more teeth. He criticized what he referred to as a "troubling little disclaimer" in the SIA document that notes the voluntary nature of the guidelines and states that "specific situations may require appropriate modifications."

"The most important aspect is accountability," Rep. Baker said. "How do we ensure they are being followed? We shouldn't have a disclaimer on the front of a code of ethics saying 'if this doesn't work on a particular case, that's OK. Just don't worry about it.' "

Responding to questions after the press conference, Rep. Baker said he is open to suggestions about how to guarantee industry adherence to whatever guidelines emerge from this summer's hearings. Though not his first choice, he said he would not rule out requiring merchant banking firms to hire outside auditors to monitor compliance.

Rep. Baker said that his preferred method of monitoring would be annual or semiannual surveys of "a sampling of firms" that would result in reports to Congress.

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