It is a fact that venture capitalism today is not what it used to be. The bountiful returns of the dotcom years are long gone and venture capital (VC) firms are now struggling to exit their investments via initial public offerings (IPOs) or mergers and acquisitions (M&A). Also, a new regulatory landscape is threatening to hinder rather than help the industry, and the companies VCs invest in require watertight strategies for major growth.
A lot of times, good intentions on the regulatory side have unintended consequences. In the case of Spitzer and the investment banks’ conflict-of-interest issue, the solution could simply focus on better disclosures concerning which reports written by the analysts involve companies that are the bank’s clients. But the regulation went too far by prohibiting research analysts from being paid from the fees generated by the investment banking business.
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