CORRECTION TEST for TODAY'S COMPLETE ISSUE Lawyers for Merrill Lynch & Co. (MER) and New York Attorney General EliotSpitzer agreed to a limited set of changes in Merrill's stock-researchprocedures, even as talks about a broader overhaul to avert possible criminalcharges against the firm stalled over the issue of money, Friday's Wall StreetJournal reported.
Under Thursday's interim accord, the big Wall Street firm promised to makesome additional disclosures about its research involving corporate clients.
The pact was designed to lift a court order sought last week by Mr. Spitzerafter a 10-month probe found numerous instances in which Merrill analystsprivately voiced reservations about companies that the Wall Street firm wasrecommending to the public. Mr. Spitzer said the positive ratings were aimed atgarnering investment-banking fees, but misled investors who lost money when thetechnology-stock bubble burst. Merrill denied the charges, and Mr. Spitzersought a court order forcing Merrill to make some changes before a finalsettlement could be reached.
Thursday's deal forces Merrill to create a Web site that will discloseinvestment-banking relationships for companies that the firm has issued researchreports by Wednesday. By the beginning of June, the firm must replace the siteby stating in research reports whether it has received or will receiveinvestment-banking fees from companies that are the subject of corporateresearch. The firm must also state on reports that investors should "assume"that Merrill is seeking or will seek investment-banking business from thecompany. In addition, Merrill must include how many buys and sells the firm hasissued in various industry sectors.
The pact, approved by state Supreme Court Judge Martin Schoenfeld, is separatefrom the firm's broader settlement talks with the attorney general's office. Mr.Spitzer is threatening the firm with possible criminal charges for misleadinginvestors with overly optimistic research that Mr. Spitzer says was published tohelp the firm win lucrative investment banking work. Merrill denies the charges.
The broader settlement talks between Merrill and Mr. Spitzer hit a snagThursday following comments from company officials that Merrill wouldn't bewilling to pay $100 million to settle charges that it misled investors with itsanalysts' research, people close to the negotiations say.
But people with knowledge of the talks say that money has become a majorsticking point and could delay a settlement until next week. Some people closeto the negotiations add, however, that while the talks hit a snag, the situationis fluid and the two sides could reach an agreement Friday.
Wall Street Journal Staff Reporter Charles Gasparino contributed to thisreport. Copyright (c) 2002 Dow Jones & Company, Inc. All Rights Reserved.
