Firing Offense Merrill's investment bankers didn't like analyst John Olson's skepticism about Enron. Merrill fired him.
By Bethany McLean and Peter Elkind Additional reporting Suzanne Koudsi

(FORTUNE Magazine) – Merrill Lynch offers up one of the most shameless examples of Wall Street's willingness to sacrifice analysts' honest research in pursuit of investment-banking work. Case in point: In 1998 a Merrill analyst named John Olson abruptly departed, due, rumor had it, to his skepticism about Enron's prospects.

Indeed, a post-bankruptcy congressional investigation uncovered an April 18, 1998, memo written by two Merrill bankers, complaining to Herbert Allison, then president of the firm, about Olson's "flawed" research. They pointedly noted that Merrill had been excluded from a recent deal in favor of banks whose analysts all had buy ratings on Enron stock. Olson was gone from Merrill just a few months later.

Yet even under congressional grilling, Merrill executives refused to acknowledge that anything untoward had happened. One Merrill honcho testified that Olson's departure was "not in any way" connected to Enron's criticism of the analyst's work.

But FORTUNE recently obtained Olson's May 15, 1998, Merrill Lynch "termination authorization form." Explaining the reasons for getting rid of Olson, it says: "In his tenure with the firm, John has had consistently poor relationships with the bankers covering his industry. Because he does not have a good working relationship with banking, his effectiveness is undermined.... the result is that he cannot represent Merrill Lynch nor provide the firm with the competitive position in the marketplace it requires to effectively sell and market its products and services."