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Strategies & Market Trends : The Final Frontier - Online Remote Trading
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To: TFF who started this subject4/9/2002 5:51:15 AM
From: supertip  Read Replies (1) of 12617
 
Merrill Lynch accused of misleading investors

David Teather in New York
Tuesday April 9, 2002
The Guardian

Merrill Lynch, the Wall Street investment bank, was last night accused by US prosecutors of misleading investors during the late 1990s.
The New York state attorney general, Eliot Spitzer, said an investigation found evidence of bias and distortion in Merrill stock recommendations in an effort to secure lucrative investment banking fees.

"This was a shocking betrayal of trust by one of Wall Street's most trusted names," Mr Spitzer said. "The case must be a catalyst for reform throughout the industry."

The attorney general has obtained a court order forcing Merrill to make explicit disclosures to clients about its investment banking relationships.

The attorney general's office released several internal emails from Merrill Lynch which showed analysts privately making disparaging remarks while publicly recommending stocks. In one email an analyst called a firm's stock "a piece of junk", while giving the company, an investment banking client, the bank's highest rating.

They also showed disquiet among analysts about pressure to make recommendations. One complained about giving a buy rating to a poor investment. "I don't think it's the right thing to do. John and Mary Smith are losing their retirement fund because we don't want a client's chief executive mad at us."

Merrill Lynch said the allegations were baseless and showed a "fundamental lack of understanding".
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