The NASD has launched an inquiry into possible conflicts of interest connected with “fairness opinions” issued by Wall Street bankers on the value of mergers and acquisitions, The Wall Street Journal reported on Friday.
The inquiry could result in tough new rules for bankers on disclosing the financial incentives they and the corporate executives they advise have for pushing through deals, the newspaper said, citing unspecified people familiar with the situation.
Investment bankers provide fairness opinions on corporate deals such as takeovers and initial public stock offerings. The changes being considered by the NASD, which oversees about 5,200 brokerage firms, also could help prevent ill-conceived deals that diminish shareholder value or lead to layoffs, the Journal said.
The newspaper said the NASD sent letters to several Wall Street firms earlier this year requesting information about recently issued fairness opinions in an attempt to examine possible conflicts.
The NASD’s board of governors may vote as soon as this summer to propose new rules on fairness opinions, the newspaper said.
The newspaper quoted NASD spokeswoman Nancy Condon as saying that the agency is examining a variety of “possible approaches” to deal with conflicts of interest involving fairness opinions but that “primarily, we’ve been working on disclosure requirements.”
The NASD was not immediately available for comment to Reuters.