BlackRock Inc will be putting an end to its worldwide analyst survey program as part of its agreement with the office of the New York Attorney General, Reuters reported. BlackRock is the largest asset manager in the world.
The deal is an offshoot of a probe made by New York Attorney General Eric Schneiderman into the firm's early release of Wall Street analyst sentiment which can influence markets, the report said. Although no fine or penalty was levied on the asset manager, BlackRock will pay $400,000 to cover the cost of the investigation and cooperate in any probe related to it.
In a statement, Schneiderman said the agreement was a major step towards putting back fairness in the financial markets and ensuring that all investors have a level playing field. He added, "BlackRock deserves credit for recognizing the need for reform when it comes to the dissemination of information that can move markets."
The agreement said that the firm's Analyst Survey Program asked many of the most prominent analysts of the world at various brokerage firms a set of questions about the firms that they were covering. BlackRock said the objective of the survey was to quantify the publicly available insights of the analysts. However, Schneiderman found that the design of the program enabled it to capture "non-public analyst sentiment that could be used to trade ahead of the market reaction to upcoming analyst reports."
Depending on the geographic location of the analysts, they were either surveyed on a monthly or quarterly basis and the program was able to get hundreds of thousands of responses. In the US, the surveys would require analysts to give their responses to questions on a scale numbered 1 to 9 and their answers were computed so that they could provide quantitative return forecasts. Barclays Global Investors, which BlackRock bought in 2009, developed the program in 2003, the report said.
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