London, Sept 06: Britain's financial watchdog has backed away from imposing tough new rules on investment banks to ensure stock research is free from bias, putting the onus on the banks themselves to manage conflicts of interest. Banks will be expected to make sure that share analysts do not attend “pitches” or investor roadshows alongside corporate finance colleagues, to avoid conflicts of interest that burned investors during the late 1990s stock market boom.

Howard Davies, chairman of the Financial Services Authority, set out this approach in a speech to UK business leaders at a dinner in Glasgow on Thursday.
“We are likely to confirm the approach that senior management should take responsibility for the appropriate management of conflicts of interest,” Mr Davies said in the speech to the Confederation of British Industry in Scotland.
“We expect firms not to allow analysts to attend pitches and road shows, or to allow their compensation to be influenced by investment banking interests,” he said.
In February the FSA had proposed tighter restrictions on investment bank research and allocation of shares in initial public offerings to ward off Wall Street-style scandals over biased research recommendations. Bureau Report