Federal authorities investigating Merrill Lynch & Co.'s public finance work in New Jersey are looking into the bond verification services of a politically connected financial advisory firm, according to sources familiar with the probe.

Agents of the Federal Bureau of Investigation are asking why Merrill Lynch recommended that issuers use the verification services of Consolidated Financial Management, a financial advisory firm that is owned by Nicholas A. Rudi, a close friend of New Jersey Gov. Jim Florio, according to sources.

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