Now my other question is, how is Salmon Barney’s conduct appropriate here. They made a concerted effort to sustain the price at 38. Failing that, the stock would have fallen to 34 on Friday. I would have bought the stock at 34 instead of the 36 I ended up paying at Market-open. Isn’t that inappropriate as well?

What is wrong in every case though, IMO – to release such reports and not disclose that the publisher and/or certain others may hold positions in the subject issues, and not disclose that the contents of the report have been made known to others ahead of general release.

Whale-like clients receiving that info ahead of time, means non only are non-Goldman clients at a disadvantage but even Goldman clients are at a disadvantage (presumably the “muppets”).

A great way to maximise your commissions would be to let clients know there was a VIP club getting upgrade info early.

Or just front run it through the prop desk.

From the Times’ article:
But while insider trading commonly involves nonpublic corporate information, advance warning on research changes can also yield quick, illicit gains. The S.E.C. said as much in a rare research case it filed in 2007 involving an executive at the Swiss banking giant UBS. In that case, eight individuals and three hedge funds were charged with profiting on tips about coming analyst ratings changes — “valuable and material, nonpublic information,” the S.E.C. said. One executive went to jail, and others settled with the S.E.C.

Parmigiani took his info to the SEC, and to Sen. Grassley. He had no luck. So he went to Gret, who specializes in stories critical of Wall Street. She wrote an article about it– IN 2009!
http://www.nytimes.com/2009/02/23/busine ss/23hedge.html

There’s nothing new in today’s article (other than a few updated references to bad banks). Why are we reading about this again?

I think the point of Morgenson’s article was that to show yet another way in which the market is rigged in favor of insiders at the expense of the average investor. The behavior that you highlight may or may not have been illegal. But please note this was not all that Morgenson wrote about: she also presented evidence of pressure being brought to bear on the analyst to change his assessment in clear violation of the Spitzer settlement.

These banks are so clearly enmeshed in a variety of conflicts of interest. They have shown time and again that they cannot be trusted.

Little by little, regular investors are being driven from the market as it becomes, more and more, a casino rigged on behalf of insiders. This should be a cause of great concern to the very people who most benefit from the financial system: bankers, for instance. And regulators. And bloggers.

But right now it appears only to be of concern only to a few intrepid reporters like Morgenson.