By STEPHEN BERNARD and MARCY GORDON (AP)
NEW YORK — Goldman Sachs Group Inc. provides some of its biggest clients stock tips that come out of regular meetings held by analysts and traders at the investment bank, according to a Wall Street Journal report.
Some of the analysts’ views, which can provide insight on potential short-term market movements, can differ from research notes Goldman widely distributes to its clients, the Journal reported. Critics claim providing the early information to only certain clients hurts customers who aren’t given the opportunity to trade on the ideas that come out of the meetings.
Brokerage firms have the right to share their information with various clients as they wish, so long as their analysts’ stock recommendations distributed publicly don’t contradict what they say internally, said Donald Langevoort, a former SEC special counsel who teaches securities law at Georgetown University.
Goldman’s compliance officers sit in on the meetings, according to the report.
“My guess is the lawyers (at Goldman) have looked closely at this” and determined it doesn’t violate securities laws or rules, Langevoort said. “Nobody on this phone call wants to get into an insider-trading situation.”
The Journal quotes Goldman’s stock research head, Steven Strongin, as saying no one gains an unfair advantage from the meeting and that the short-term ideas do not clash with the long-term forecasts in written research notes.
The tips come out of meetings called “trading huddles,” the report said. However, very few of Goldman’s thousands of clients who get written research from the bank receive recommendations from the huddles, according to the Journal.
The Journal said, citing participants of the huddles, that the meetings can last up to about an hour. At the meetings, analysts bring trading ideas and Goldman’s traders talk about financial markets and what could trigger movements in specific stocks.
Employees then call and provide the information to top clients, while in-house traders cannot use the tips until after they’ve been given to customers, the report said.
Recommendations from the meetings usually remain in effect for a week, according to the Journal.
A Goldman spokesman didn’t immediately return messages seeking comment. A Securities and Exchange Commission spokesman had no immediate comment.
Gordon reported from Washington.
Copyright © 2009 The Associated Press. All rights reserved.

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