After investing millions of dollars in developing a unit that sold independent research to investors, Goldman Sachs is shuttering the business, according to Reuters. The bank has reassigned the dozen employees at the venture and sold its minority stakes in firms that were producing the research. In the end, it made a profit from the gig, the service reports. Reuters goes on:
Hudson Street's failure is the latest sign of how difficult it is for smaller research houses to thrive in a market where everyone from the big Wall Street banks to major mutual fund firms are seeking to cut costs. It is also a sign that major investors may no longer be prepared to pay for a diversity of opinion about the markets.
A few years ago, independent research was all the rage, following a $1.4 billion settlement in 2003 between banks and Eliot Spitzer following accusations of tainted research. The deal included a mandate for banks to invest in independent research. As that mandated phased out, the economy tanked, and so did the demand for such information. Spending on independent research is down 24 percent over 2008.
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