NEW YORK (CNN/Money) - The Securities and Exchange Commission confirmed Thursday that it will join with other regulators and launch a formal investigation of analysts' conflicts of interest.

The New York Stock Exchange, New York State Attorney General Eliot Spitzer, the regulatory arm of Nasdaq, and state securities administrators will join the SEC in the investigation. The probe will look at whether analysts issued favorable research to attract or retain investment banking clients.

"This is the next step -- and a critical one -- in the Commission's year-long review of analyst practices," SEC Chairman Harvey Pitt said in a statement.

"There is no room in financial markets, nor in financial intermediaries, for those who would put their own interests ahead of those of their customers," NYSE Chairman and CEO Dick Grasso said.

The joint probe follows a meeting between Pitt and Spitzer on Tuesday in Washington. Spitzer has been weighing whether to bring criminal charges against Merrill Lynch.

Spitzer, using e-mails he obtained through subpoenas, accused analysts of encouraging investors to buy stocks the analysts privately criticized to secure or retain investment banking business. He announced the Merrill Lynch case April 8.

Earlier this week, Spitzer announced he would form a multistate task force to investigate possible securities fraud committed by brokerage firms. That investigation will now be part of the SEC inquiry, a Spitzer spokesman said.

The New York Attorney General is also reportedly investigating Salomon Smith Barney and issued a subpoena requesting copies of all documents authored by the firm's top telecom analyst, Jack Grubman.

The SEC investigation will focus not only on Merrill but on other investment banks, a person familiar with the situation told CNN/Money.

At a meeting scheduled for May 8, the SEC will also consider rules proposed by the NASD and the NYSE. The rules will address conflicts that can arise when research analysts recommend securities in public communications.

--The Associated Press contributed to this report