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Scott Cleland was independent before independent was cool.
At a time when we've come to expect federal investigations of the star analysts who once regularly appeared on TV as prophets of the new economy, Cleland is a refreshing departure from the norm.
Since his days as a technology and telecom analyst for Legg Mason, and before that Schwab, Cleland has been widely known for his willingness to call it as he sees it. He's always been skeptical of the "dark side" of Wall Street research: The fact that most analysts work for firms whose business sides have a direct financial stake in their research.
Wile careful to call the Wall Street companies he worked for "fine" firms, Cleland decided a few years ago to permanently remove himself from any possible conflict of interest. He left Legg Mason with colleague Bill Whyman and founded The Precursor Group (www.precursorgroup.com), a research house with no ties to Wall Street's financial side.
That means no investment banking, no money management, no stock trading and no stock picking.
In fact, Precursor analysts aren't even allowed to participate in Wall Street's grand casino.
"Our analysts aren't allowed to own stocks," Cleland says, just mutual funds.
But simply running an independent research house isn't enough for Cleland. Now he's trying to evangelize his message of independence through the Investorside Research Association, a trade group-cum-certification body he founded last summer with Argus Research, a New York-based independent research house.
"Ninety-five percent of research is investment banking research," Cleland says. "The way to clean up research is to create more market competition. The way to clean up Wall Street is to take their [market] share. Force them to better serve investors."
Investorside members - there are 18 so far - must testify in a sworn affidavit that they perform no investment banking, and...