Briefing.com On Merrill Lynch Settlement:
There is little confusion as to why shares of Merrill Lynch are trading higher today. Earlier this morning, the brokerage firm announced that it had reached an agreement with the New York State Attorney General surrounding the investigation that centered on its Internet sector securities research from 1999 to 2001. By the way, it has been noted that the settlement represents neither evidence nor admission of wrongdoing or liability. Under the terms of the agreement, MER will make a civil payment of $48 mln to New York State and an additional $52 mln to settle the matter with all other states. Both payments are contingent on all states accepting the agreement. For added detail on the provisions of the agreement, you'll want to read MER's press release. When you do, you'll find a statement of apology from MER at the end of the press release that says the firm "...sincerely regrets... that certain of our Internet sector research analysts expressed views that at certain points may have appeared inconsistent with Merrill Lynch's published recommendations." Now, Briefing.com appreciates the "forgive and forget" way of life, but in this instance, we find it doubtful that investors-- small and large alike-- who were burned by the published recommendations of MER's obviously conflicted Internet sector research analysts will be so willing to forget. Furthermore, we find it hard to believe that they will consider MER's $100 mln fine, and its promise to be good from now on, appropriate restitution when measured against the cumulative losses they incurred. One gets the sense that MER knows as much considering it did not admit any guilt in the matter. If it had, it would have given plaintiff's attorneys plenty of fodder for civil lawsuits. As it stands now, those attorneys will have to work a little harder to make their case, but you can bet they are going to give it their best shot. In sum, the settlement announcement lifts some of the uncertainty surrounding the investigation as it removes the threat of criminal charges. It is too pollyannish, though, to think today's settlement with the NY State Atty. General puts this matter to rest for MER as it still faces civil lawsuits. 2002 is going to be remembered as the year of accountability and MER, we suspect, will have more accounting to do with respect to this matter for the foreseeable future.-- Patrick J. O'Hare, Briefing.com |
