Analysts quit high-flying Wall Street jobs

NEW YORK -- For stock analysts, especially those who enjoyed the spotlight in the market's late 1990s boom, fun has become as elusive as a tech company on the rise.

Many high-profile analysts are quitting their jobs amid dwindling compensation, declining morale and tough new rules designed to prevent more scandals.

Some are taking research jobs with institutional investors such as mutual funds and hedge funds. Others have decided to give it all up, often after decades in the business.

Morgan Stanley's chief global strategist for asset management, Barton Biggs, is leaving his job to start a hedge fund for the firm. Bear Stearns Cos. gaming analyst Jason Ader gave notice last month, saying he was fatigued and heading for the beach.

Top analysts have routinely changed jobs or in some instances moved to new endeavors after making millions in salary and other compensation. And in the continuing market downturn, some are being pink-slipped as research companies try to reduce staff and costs. But some are clearly becoming disenchanted, and openly expressing their feelings.

UBS Warburg bank analyst Diane Glossman is literally heading for greener pastures this summer, when she plans to start training for Olympic-level horse riding competition. She's among four analysts who have decided to leave the firm in the last two months.

Glossman, who spent 25 years with UBS Warburg, did not rule out a return to the business. But in her parting note to investors, she said, "It's way more fun when the market's going up, no?"

Her counterpart at Merrill Lynch, bank analyst Judah Kraushaar, announced last month he was also leaving after more than two decades; he plans to take a year off and perhaps write a book. At least six others have announced plans to leave Merrill since December, including media analyst Neil Blackley and software analyst Chris Shilakes.

Pay pushed down

New legislation that bars firms from tying research compensation to banking deals has pushed analyst pay down. Analysts are also facing greater internal scrutiny as their research units are reorganized under the terms of the industrywide settlement negotiated by New York Attorney General Eliot Spitzer.

Burnout is likely as big a factor in the current exodus, said Nancy Bush, a financial analyst who left Wall Street last year to start her own research firm.

"I think people are just tired of not having lives," Bush said.

"The remuneration on Wall Street is not as great as it was in the roaring '90s," she said. "Add to that the Eliot Spitzer investigation, which has given us all a black eye, and enough other factors, and people will just say, 'I want to do something else.'"

Managers have left as well. Merrill research chief Robert McCann resigned last month after 21 years, and Deepak Raj, deputy director of global securities research, is leaving after 24 years with the firm.

This has led to a good deal of movement within the industry. Merrill announced last week that Salomon Smith Barney brokerage analyst Guy Moszkowski will replace Kraushaar.

Credit Suisse First Boston Corp., which has come under intense regulatory scrutiny over research and banking conflicts, has lost at least five analysts to other firms; UBS Warburg recently hired away retail analyst Gary Balter and four CSFB health-care analysts left for Bank of America Securities.

CSFB brokerage analyst Joan Solotar chose to leave the industry altogether last year, citing grueling travel associated with her job.

In some cases the departures have affected research coverage. After Mark Alpert left his job at Deutsche Bank Securities to work for a hedge fund, the firm suspended coverage of the consumer finance companies he researched, including Capital One Financial Corp. and MBNA Corp.

Some analysts have been fired. Goldman Sachs Group Inc. dismissed six analysts last month and in the process temporarily suspended research coverage of some companies, including AOL Time Warner Inc. and Walt Disney Co. Goldman has said the cutbacks were related to market conditions, and the company expected to resume coverage in the future.

During the dot-com boom, investment bank analysts became buzz-worthy commodities in their own right, appearing on television and magazine covers as stocks skyrocketed on their optimistic calls. Technology analysts like Merrill Lynch's Henry Blodget and Jack Grubman of Salomon Smith Barney attained near-celebrity status and raked in multi-million dollar salaries.

Regulators later accused analysts of intentionally overvaluing stocks they covered to promote their firms' banking interests. An embarrassing series of e-mails, in which analysts derided stocks they publicly praised, appeared to prove the charge.

'Spectacular in scope'

Grubman has since been barred from the securities industry and Blodget is facing regulatory action. Frank Quattrone, CSFB's former head of technology, is also under investigation.

"It was only a few people who were improperly influenced," said Megan Gates, a securities lawyer with the Boston firm of Mintz, Levin. "But it was so spectacular in scope, and so many people lost so much money by relying on what these people said, it has seriously compromised their stature in the eyes of the public."

With merger and acquisition activity down and firms looking to trim their budgets, more cuts seem likely. John Challenger, chief executive of Challenger, Gray & Christmas, an employment research and recruiting firm based in Chicago, said there's no shortage of stock analysts looking for work.

"I think there are a number of people who are disillusioned and worrying that the system will never get back to what it once was," Challenger said. "Every quarter it seems there's more reason to think that a return to the days we saw in the '90s is still a long way off."

For Bush, who now works from her New Jersey "farmlette" -- a private oasis she rarely saw when she worked as an analyst at Dean Witter, Brown Brothers Harriman and the boutique firm Ryan, Beck & Co. -- quitting her job after 15 years took a good deal of soul searching.

Although she enjoyed her work, she said was frustrated by Wall Street's growing emphasis on immediacy rather than quality analysis. Now she provides research for the same financial companies she covered before, but deals with a much smaller group of clients, all institutional investors.

"I have chosen to deal with a group of clients who know they will not get the first opinion from me," Bush said. "But hopefully they will get the most thoughtful opinion, and the most reasoned."