Has an Australian stockbroker ever recommended that investors do not invest in a new share float that it is underwriting?
Or has any stockbroker pulled out of an underwriting on the advice of its research analysts, who didn't think it was a good deal?
Last week some of America's most prestigious stockbroking houses paid billions of dollars in fines because of a conflict of interest between their investment banking and broking operations. Prestige global groups such as Citigroup, Salomon Smith Barney , Merrill Lynch and Credit Suisse First Boston were the worst offenders but they certainly weren't alone.
The US corporate cops, the Securities and Exchange Commission, found broking houses would earn big fees helping companies to list on the stockmarket. The research departments of those same broking houses would then recommend investors buy the shares, even when they privately believed the new company was a dud.
In other words, the supposedly independent advice of the research departments was biased.
It was nothing short of betraying their clients. Betraying their clients' trust. A trust that was based on the belief that a broker's advice was given in the best interests of its client and not in the interests of the broker's investment banking department to make more fees.
That betrayal has been costly for US brokers.
But is that betrayal confined to the US? What about Australia?
Naturally, Australian brokers say the same situation doesn't happen here. They say there has been a tightening of the rules ensuring an independent relationship between the research team and the corporate side of the business.
All research reports now include disclosure notes the fine print that includes a full list of all underwritings from which a broker has received fees over the previous 12 months. The fine print also makes the point that the opinions of the report are those of the individual analyst and not the broker.
But is it enough to put it in the fine print? Does the fine print translate into reality? I wonder.
The current float of insurance giant Promina has been a fascinating exercise to watch. Every broker involved in the float, earning fees, has issued glowing reports about the company and why investors should get on board.
But reports from other brokers have ranged from being lukewarm to downright critical. In fact, some of the brokers who tried to be part of the advising consortium, but were rejected, became the most critical.
Sour grapes? Revenge? Who knows.
However, it does indicate that there appears to be a link in Australia between advisory fees and recommendations.
That is about to be tested by the Australian Securities and Investments Commission, which is close to completing its review announced last year into the independence of the stockbroking industry.
The coming CLERP 9 financial sector regulations are also likely to tighten the rules.
The bigger issue is whether the current, traditional structure of stockbroking firms can survive.
Broking houses earn their money from enticing clients to buy and sell shares. By itself that revenue doesn't appear to be enough to pay for the costs and salaries.
It appears that brokers could not survive without their investment banking or corporate advisory operations and the lucrative fees they earn. That's why it is a brave research analyst who issues a negative report on a company that is paying his advisory colleagues big fees.
Certainly no stockbroking business would survive purely on its research; clients expect free research.
So the research teams need the brokers to entice clients to trade shares on the back of their recommendations. The corporate advisory arms earn big fees by helping companies sell their shares.
But the advisers need the research teams to provide a positive recommendation of their client, so the brokers can entice clients to buy the shares and fulfil the promises made by the advisory team to justify their fees.
Break the nexus between research and advisory, and the current structure of stockbroking, with its high salaries, simply can't be sustained.
David Koch is Channel Seven finance editor and hosts Sky Business Report on Sky News channel.
Further reading: 
