NEW YORK: Merrill Lynch took a step toward rehabilitating its reputation by agreeing to a settlement with New York Attorney General Eliot Spitzer in his probe of the firm's research practices. During his investigation, Spitzer released a series of damaging internal e-mails in which Merrill analysts were privately disparaging stocks they were publicly recommending.The settlement requires the US' largest brokerage firm to pay a $100 million fine and take steps to separate its analysts from the influence of its investment banking division - a move that many reputation experts said Merrill should pursue.
During the week, Citigroup brokerage arm Salomon Smith Barney said it would voluntarily adopt the strictures of the Merrill settlement. Goldman Sachs also announced similar changes, and said that it had appointed a former president of the New York federal reserve bank to the newly created position of investment research ombudsman.
The moves echo sentiments expressed to PRWeek by financial communications pros.
"The firms are realizing they have to change their ways,
Jeff Corbin, managing partner at KCSA, told PRWeek before the settlement was announced.
See feature, p.15.