The global settlement between the nation's largest investment banking firms and state and federal regulators is expected to be approved by the Securities and Exchange Commission as early as today, ending months of intense negotiations and false starts.
The deal, seemingly on the cusp of being finalized since early February, got repeatedly hung up on several issues, from the settlement's exact wording to how firms will provide third-party research, sources with knowledge of the deal said.
The talks involved nearly all the big Wall Street firms, including Citigroup Inc., J.P. Morgan Chase & Co., Merrill Lynch & Co., Morgan Stanley, Lehman Brothers, UBS AG, Goldman Sachs Group Inc., Credit Suisse First Boston Corp., Deutsche Bank AG, and Bear Stearns Cos.
The repeated delays mean the final settlement's long-anticipated release will probably coincide with a new Wall Street scandal - a burgeoning investigation into alleged front-running by New York Stock Exchange specialists.
Meanwhile, according to The Washington Post, Senate Finance Committee Chairman Charles E. Grassley, R-Iowa, thinks the SEC should release the details publicly before a vote.
Observers predict that many of the original provisions released on Dec. 20 will have been altered, if not removed altogether - particularly, the one that would force investment banks to pay for independent research, which was the subject of intense debate.
The firms are also expected to neither admit nor deny wrongdoing. Concerned over the flood of current and expected class actions, they have resisted signing anything that even hints at culpability, observers say.
"The global settlement is not going to be an admission of guilt, and so the facts released are not going to be a direct basis for liability," said Adam Pritchard, a professor at the University of Michigan School of Law. "At the same time, they certainly would be helpful in helping to state a cause of action."
Attorneys representing shareholders are said to be salivating in anticipation of the settlement. In particular, class-action lawyers, now faced with a high hurdle to compel discovery in their suits, will no doubt pore over the findings.
