Merrill Lynch will pay a $100 million penalty and enact significant new policies in its research division under a broad settlement reached with the New York State Attorney Generals office over the firms stock-research practices.
Merrill Lynch agreed to enact reforms to further insulate securities research analysts from "undue influence by its investment banking division and will change the way analysts are compensated, according to a statement from Attorney General Eliot Spitzers office. A core issue in the case was whether Merrill Lynch research analysts were being "truthful and fair in their public recommendations of stocks from companies for which Merrill Lynch did investment banking business, the statement said.
The agreement settles all aspects of the state attorney generals inquiry pertaining to Merrill Lynch and the firms current and former employees. The inquiry centered on Merrill Lynchs Internet sector securities research from 1999 to 2001.
"Because our many employees work day after day to place our clients interests first, resolution of this matter is very important to us. Todays result will ultimately benefit all investors and the capital markets, David H. Komansky, Merrill Lynch chairman and CEO, and E. Stanley ONeal, president and COO, said in a statement.