NEW YORK Merrill Lynch & Co. and other investment banks could see their credit ratings lowered if state and federal investigations of their research practices result in criminal indictments, Moodys Investors Services said in a press release late Monday.
Merrill is in settlement negotiations with New York Attorney General Eliot Spitzer, who last month accused the company of issuing biased research to benefit its investment banking business even though analysts were writing disparaging internal e-mails about stocks they talked up in public. Merrill has denied the charges, although chairman and chief executive officer David Komansky has apologized publicly for the e-mails.
Mr. Spitzer has widened his investigation to include most other major Wall Street firms.
Moodys currently rates Merrill Lynch Aa3, with a negative outlook. Other firms the agency could review in light of the investigations are Bear Stearns Cos., Credit Suisse First Boston Inc., Lehman Brothers, Morgan Stanley Dean Witter & Co., and Citigroup Inc. unit Salomon Smith Barney Holdings Inc.
The agency added, however, that each of these companies have sound liquidity profiles.
