Payback may be small

NEW YORK -- A billion dollars just doesn't go as far as it used to. Divide it by all the people who think they deserve a share, for instance, and it's maybe a few hundred dollars tops.

It's something to think about with Wall Street firms close to settling investigations into conflicts of interest within their businesses.

Investors' representatives are pressing hard for the $1 billion in expected fines to go to them.

But is that how the money will best be spent?

Maybe a better solution would be to put it toward increased regulation and education in hopes that a similar stock-market meltdown won't happen again.

Investors want to be reimbursed for the steep losses they suffered because they bought stocks that were touted by analysts but eventually went bust.

It wasn't that analysts just got it wrong. It was their ways that were deceiving.

Many gave rosy recommendations of companies they covered so their firms could win lucrative investment banking business to do merger deals and stock offerings.

And their positive reviews often came even though the businesses were crumbling, prompting unknowing investors to hold on when they should have gotten out.

Now, securities regulators are near a global settlement with a dozen of Wall Street's biggest firms to end investigations into their questionable business practices.

Estimates put the total settlement around $1 billion, with each firm assessed individually to determine the size of its contribution.

They are also expected to contribute another $1 billion in total to support independent stock research that is no way linked to their investment banking businesses.

The pressure is on regulators to siphon off at least some of the money for investors. That comes after none of Merrill Lynch's $100 million settlement last spring for issuing biased research was earmarked for them.

But here is where it gets tricky. Try dividing up the money among the masses.

There is no database to help determine who should get paid back, and even if a list were created, it would be difficult to decide who gets how much.

Would it be evenly parceled out? Would preference be given to those who bought early? Those owned the most? Those who lost the most?

And imagine how long the list of claimants could be. Start off with anyone who bought individual stocks or mutual funds, or participated in 401(k) or pension plans.

Add anyone who claims to have been influenced to buy stocks not just from reading the actual analysts' reports but from watching the analysts being interviewed on television.

The bottom line: Millions of people could easily vie for the money. Split that up, and it doesn't really amount to much for anyone.

With that in mind, there are other options. And while they might not hit investors' pocketbooks directly, they could have a significant impact over the long term.

One possibility: Put the money toward increasing the oversight of Wall Street. Add more regulators and investigators to monitor how investment firms are being run, which would help ensure that a wall remains between analysts and bankers.

Another idea is designating some of the money for investor education.

While analysts did give out biased advice during the boom times, investors, too, were at fault by not properly evaluating the stocks they were buying. They quickly put money into companies with little hope of ever turning a profit.

Going forward, they need to know what questions to ask before they sink their money into "hot" stocks.

Maybe that could come in the form of advertising campaigns, similar to those now used to steer teens away from smoking. Or maybe Web sites could be set up to give some basic stock researching techniques.

One thing is for sure in all this mess. A billion dollars doesn't add up to much, not from companies who brought in billions during the boom times.

On principle, investors deserve it all. But that might not have any effect.

Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck@ap.org.