David Pottruck, the The Charles Schwab Co. co-CEO, says the best way to clean up Wall Street’s tarnished image is to disclose all.
"The way to fix things is with more disclosure," Pottruck said on Friday in a speech at the National Press Club. "We don’t need brick walls that separate. We need glass walls that we can see through." Pottruck said that Wall Street firms should fully disclose their investment banking relationships on companies they recommend and, further, tell investors how much they are making from those firms.
Pottruck said that analyst reports should also report how much money their firms are making in investment banking fees from companies under discussion, the performance of past analyst recommendations, the firms’ system for awarding shares of IPOs to investors and the firms’ formulas for compensating brokers.
He also said completely separating stock analysis from investment banking is not the answer. He said the U.S. financial system "needs repair, not replacement."
That comment may surprise, since Schwab’s television ads depict Wall Street brokerages as hopelessly corrupt bucket shops pushing lousy stocks.