SAN FRANCISCO (CNN/Money) - New York state Attorney General Eliot Spitzer has announced his settlement and issued his punishment, and is now riding off in pursuit of bigger game. Of course, I'm talking about the landmark $1.4 billion settlement made official on Monday between Spitzer's office and 10 of Wall Street's biggest firms and their research arms.

Spitzer's revolution, however, doesn't begin with this week's announcement. It's been taking place for more than a year now. I talk with analysts four or five times a week, and I've noticed subtle shifts in their behavior and methods since April 2002, when Spitzer first shed light on the dark sway that investment banking departments hold over research divisions.

Contrary to the scandalous e-mails that Spitzer unveiled in making his case, most analysts I speak with are honest and cogent folk, who, for the most part, are now freer to speak their minds on companies than they were in the bubble days.

"In the past, analysts would discuss negative aspects about a company but wouldn't be able to downgrade the stock," says Kei Kianpoor, CEO of Investars, an independent stock analysis firm. "What was shared with institutional investors wasn't reflected in the analyst's stock recommendation."

Now, however, analysts are less likely to ride a "buy" recommendation all the way to the OTC boards -- something that wasn't uncommon three years ago. In fact, in 2000, less than 2 percent of institutional analysts' stock recommendations were "sells," according to Chuck Hill, director of stock research for Thomson First Call.

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Today that percentage is in the mid-teens and trending higher. Part of this shift can be traced to a National Association of Securities Dealers ruling in September mandating that analysts disclose in their reports how many buys, sells, and holds the firm has, and where in those rankings the firm's investment banking clients sit.

For Morgan Stanley, the change was dramatic: Before the NASD ruling, 2 percent of the company's calls were sells. After the ruling, that percentage shot up to 22 percent -- in one day.

"I think the quality of the research is getting better to some extent," says Hill. "[The industry has] eliminated a lot of the high-paid stenographers."

While these are positive developments that came out of the pressure Spitzer brought to bear, several other issues remain just below the surface, and these suggest that the war for full research transparency is far from won.

One area receiving a lot of investor attention these days is executive compensation. Don Carty recently resigned as CEO of American Airlines (AMR: Research, Estimates) after he failed to disclose the generous bonuses he'd promised his executives. Other executive pay packages now face increasing shareholder scrutiny amid poor stock performance. Though compensation is a concern for investors, you rarely hear analysts inquire about it during conference calls or mention it in reports.

"The questioning [about compensation] on conference calls hasn't gotten any tougher than it was four years ago," says Joseph Beaulieu, an analyst at independent research firm Morningstar.

One of the reasons for this is that, in light of Spitzer's settlement, which requires research firms to provide independent research alongside their reports, analysts must guard their relationships with executives, including the access they enjoy to companies' inner workings. Most view this access as a high-value competitive advantage. Asking pointed questions about compensation, they fear, might upset that delicate relationship.

And these delicate, often unspoken relationships form the foundation of what Spitzer is targeting. While his recently concluded research efforts are laudatory, many more similar campaigns are needed if the insular high-finance world of multibillion-dollar winks and nudges is ever to be cleaned to a degree that appeases the individual investor.

Everyone I spoke with felt that the results of the Spitzer settlement are generally positive and that the settlement should result in analysts giving investors a more complete -- if not total -- picture of a company.

But investors should hardly be satisfied that Spitzer's job is done. He's accomplished a lot, no question, but we need to remember that he had the luck of good timing. With the IPO market dead on arrival, the institutions in question have relatively few -- if any -- deals to chase, meaning there is hardly any pressure for banking arms to lay on research departments. For Wall Street, it's as convenient a time as any to seek penance.

But will the Spitzer measures prove strong enough when the market comes back and the temptations begin anew? "Right now is not the acid test," says Hill. "The [banking/research] conflict isn't there. But it will come back."

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