By JOHN KENNEDY

Most of us can rattle off the names of companies embroiled in corporate scandals as fast as we can say the letters of the alphabet.

Corporate fraud has been making headlines for some time now, and the message seems clear every place you turn whether it’s television news, the front page of the paper, or the Internet. Unlike in the past, Corporate America must be held accountable for its actions, and if those acts are fraudulent, corporations should pay the consequences.

Now that major corporations are finally beginning to clean up their act, it’s time for financial management firms to do the same. I met with New York State Attorney General Eliot Spitzer and state treasurers from across the nation this past week to initiate ways Louisiana and other states can protect investments of taxpayer money from banking and management firms that do not prevent internal conflicts of interest.

The goal of the meeting was for states to come together to send a clear message to the leading financial firms in America. We will not invest our money with you unless you make a public effort to play by the rules, to play fair, and to tell us the truth about what’s going on in your company.

Louisiana and other states are pushing for financial firms to adopt the “Merrill Standard” that resulted from a $100 million settlement between Merrill Lynch and the State of New York. General Spitzer and Merrill Lynch reached an agreement requiring the investment firm to totally separate its stock analysts’ research from the firm’s underwriting and other business to prevent all potential investor damaging conflicts of interests.

National financial management firms such as investment banks have two main lines of business. One division, which develops buy and sell recommendations on stocks and bonds, focuses on research, where analysts study stocks in the U.S. and international markets and objectively give opinions and ratings on them. The other division’s focus is marketing, where investment bankers help public companies market their stock to investors in order to raise capital.

These two lines of business should operate separately and independently from one another. A conflict of interest can arise if analysts give good ratings to poor stocks so investment bankers will be better able to market them to the public. This practice improves the bottom line for a financial management firm and a company selling stocks, but it can hurt individual investors.

I am confident Louisiana can make a difference in stopping potential investment conflicts of interest involving the funds invested by our state.

We invest a large amount of money in fixed income and equity markets, and we hire a significant number of firms to handle bond transactions for the state.

Money talks, and hopefully, it will make investment firms listen.

JOHN KENNEDY is Treasurer for the State of Louisiana.