Table: Getting Tough
How Wall Street is leading the push for corporate reform
They're voting with the billions of dollars in their portfolios by dumping stocks of companies with complicated financials and shoddy executive oversight. Some complain directly to CEOs and directors. If that fails, they launch proxy fights. With so much money at stake, who can blame them?
The New York Stock Exchange is tightening its listing standards to force corporations to be more accountable to shareholders. Nasdaq is also drafting new rules. With the SEC and investors around the world looking to them for leadership, they have to act. But neither wants to see trading dry up, either.
They're scrambling to regain investors' trust by downgrading more stocks to "sell"--showing they can be critical of investment-banking clients. Major firms are also rolling out new stock-rating systems and restructuring analysts' pay to make it more heavily weighted to their stock picks. Some are directly urging corporate execs to clean up their acts. Unless investors regain confidence in Corporate America, bankers' brokerage and dealmaking business will dwindle.