Two Sigma Suspends Analyst Survey

Feb 10 2014 | 10:46am ET

Hedge fund Two Sigma Investments has ended its survey of stock analysts, amidst scrutiny of such practices by New York officials.

Two Sigma suspended its survey in the middle of last month, shortly after BlackRock agreed to end its survey as part of a settlement with New York Attorney General Eric Schneiderman. Two Sigma paid the firms of the 1,300 analysts it surveyed to participate.

Schneiderman has vowed a crackdown on what he calls "Insider Trading 2.0," seeking to block firms from gaining early access to such information. His office had subpoenaed Two Sigma last year.

"Restoring full confidence in the fairness of our markets means ensuring there is one set of rules for everyone," Schneiderman said. "The time has come for major firms to stop providing unfair advantages to themselves or elite traders at everyone else's expense."

"The BlackRock settlement may represent a change in the law regarding equity analysts' communication with their clients," Two Sigma said. "A compliance-minded firm carefully studies what its regulators say and we are doing exactly that."

Two Sigma launched its analyst survey, one of the largest on Wall Street, in 2008. The firm said it used the poll to learn public, rather than confidential, information.


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