graphic
graphic  
graphic
News > Companies
graphic
Merrill to make new offer
Brokerage house to make revised settlement offer to New York attorney general, sources say.
May 6, 2002: 5:55 PM EDT

NEW YORK (CNN/Money) - Merrill Lynch is set to make a revised settlement offer to New York Attorney General Eliot Spitzer, sources told CNNfn Monday.

Sources said the settlement offer could come before a Thursday court hearing to set deposition schedules for the Spitzer case against the brokerage firm for alleged conflicts of interest between the firm's research and investment banking arms.

graphic
graphic graphic
graphic
The revised offer could come Wednesday, the day the Securities and Exchange Commission plans to hold a meeting to consider rules for research analysts.

The whole brokerage sector has come under scrutiny since Spitzer obtained a court order for Merrill Lynch to disclose business dealings with companies its research department covered. The attorney general also released e-mails which appeared to show analysts being pressured to give stocks a higher rating because of banking relationships.

A spokeswoman for Spitzer said Merrill has not yet made a new offer, but added "the ball is firmly in Merrill's court."

Links between what Wall Street stock analysts get paid and their roles in helping their firms win investment-banking business may be more cut and dried than executives have said, a newspaper reported Monday.

  graphic  Related Stories  
  
Merrill's Komansky apologizes
Merrill settlement closer
Merrill talks hit snag
  

Several employment contracts and accounting firm policies state clear rules for bonuses and compensation related to bringing in new business, including which deals would garner the most extra cash, according to the Wall Street Journal.

The documents reviewed by the newspaper are likely to be eyed by investigators looking into whether a conflict of interest existed among Wall Street stock pickers who may have received monetary rewards related to their firm's banking business.

Separately, New York Stock Exchange Chairman Richard Grasso offered Friday to help bring about a quick resolution to the Merrill case, suggesting to Spitzer that he meet with Merrill CEO David Komansky.

NYSE spokesman Rich Adamonis confirmed a Journal report which said Grasso is concerned about the perception that "Wall Street is totally corrupt" and offered to meet with Komansky and Spitzer without lawyers present to structure a deal.

"We're just beginning to see massive evidence that analysts' research for years has been tainted by employment contracts that directly compensate them" for investment-banking work, Spitzer was quoted in an interview with the Journal. "Analysts cannot be compensated on transactional work ... This is a central issue of the reforms we are seeking."

The newspaper reviewed a contract from Credit Suisse First Boston and an in-house memo from Prudential Securities, according to the report.

The CSFB contract said banking-related compensation could range from 1 percent to 3 percent of "the firm's net profit per transaction ... with a cap of $250,000," the report said. The Prudential memo, dated October 1997, also said percentages had been set related to monetary rewards for bringing in new business.

Also on Monday, Moody's Investor Services said investigations which lead to indictments of brokerage firms could lead to negative debt ratings. Moody's had already warned about possible downgrade of Merrill, but has now expanded that warning to the entire sector.  Top of page






  graphic

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.