Merrill Shares Fall, Court Deadline Looms
The New York Times
April 11, 2002
By REUTERS
Filed at 11:55 a.m. ET
NEW YORK (Reuters) - Shares of
Merrill Lynch & Co. Inc. (MER.N)
fell more than 5 percent on
Thursday as the Wall Street firm
faced an evening court-imposed
deadline to disclose its
investment banking relationships
on its widely circulated research
reports.
A state Supreme Court justice on Monday granted Merrill
a three-day stay -- which expires at 5 p.m. (2100 GMT) --
after the New York attorney general slapped the nation's
largest brokerage with restrictive measures for its
research.
Merrill shares slid $2.60, or nearly 5.11 percent, to
$48.32 in late morning trade on the New York Stock
Exchange. The shares were among the most active issues
on the NYSE.
A Merrill spokesman was not immediately available for
comment on the firm's plans, but Merrill previously
denied the allegations against it.
The brokerage sector's shares took it on the chin with
Merrill on Thursday, reflected by a 3.17 percent drop in
the Amex Broker-Dealer Index (.XBD).
The dramatic fall in Merrill's shares represent the best
buying opportunity since the end of September, said
analyst Dave Trone of Prudential Securities. Merrill shares
hit a 52-week low of $33.50 on Sept. 21, in the wake of
the World Trade Center attacks.
``The presumed consequences that are being priced in (to
Merrill shares) are overblown,'' Trone said. Even if Merrill
is forced to pay a penalty of some sort, it would not have a
lingering effect on its business, he said.
``Fines and financial penalties get shrugged off as
one-time items,'' Trone said.
The attorney general, Eliot Spitzer, on Monday obtained a
court order requiring Merrill to disclose potential conflicts
of interest in its research reports. Spitzer's office said a
10-month investigation showed Merrill analysts boosted
stocks in public, but disparaged them in private.
A spokeswoman for Spitzer's office was not immediately
available for comment.
Spitzer has charged that Merrill's Internet unit, headed
by star analyst Henry Blodget, tailored its research to
attract investment banking business like stock
underwriting and merger deals.
The attorney general has refused to rule out the
possibility of criminal sanctions, which could prove
devastating for a business that is based on trust, as
evidenced by the woes of accounting firm Andersen.
Spitzer has said he requested the court order against
Merrill after he and the firm failed to reach a settlement,
which could have included Merrill spinning off its
research group as a separate entity.
Spitzer has also subpoenaed Merrill rivals, including
Goldman Sachs Group Inc. (GS.N), Credit Suisse First
Boston, Morgan Stanley (MWD.N) and Lehman Brothers
Holdings Inc. (LEH.N), The Wall Street Journal reported
on Thursday.
Morgan Stanley shares fell $2.29, or 4.2 percent, to
$52.22 in late morning trading on the NYSE.
nytimes.com |
