B: Nader Bearish On Merrill Lynch Settlement; Calls Terms Agreement a Slap on
(Comtex 05/21 18:23:53)
the Wrist; Calls On Spitzer To Reconsider
WASHINGTON, May 21, 2002 (U.S. Newswire via COMTEX) -- Ralph Nader today dubbed
the agreement between New York Attorney General Eliot Spitzer and Merrill Lynch
"grossly inadequate" to protect investors.
"I call on Attorney General Spitzer to reconsider his framework reached with
Merrill Lynch as it insufficiently protects investors and shareholders," said
Nader.
This agreement leaves shareholders unprotected for several reasons:
1. It denies restitution to investors who were harmed.
2. By allowing Merrill Lynch to avoid admitting wrongdoing, this deal makes it
much more difficult for investors to recover in private civil litigations.
Spitzer agreed to the following phrase by Merrill Lynch regarding the agreement:
"(It) represents neither evidence nor admission of wrongdoing or liability".
Said Nader: "This betrays Spitzer's own standards that he insisted on -- an
admission of wrongdoing -- as a condition for Merrill Lynch to avoid criminal
prosecution. "
3. Any deal with Merrill Lynch or any other brokerage should require that
investment banks divest their analyst divisions that provide investment advice
to the public. There needs to be a complete separation of analyst and investment
banking functions to protect investors. This deal does not achieve this. Only if
analysts are entirely independent of investment bankers can investors be
confident they are receiving objective advice. "Spitzer's deal even allows
analysts to continue to attend investment banking roadshows," said Nader.
"Investors should hang onto their wallets."
4. Nader criticized Spitzer for commending Merrill Lynch in a press release
announcing the settlement. "You don't commend someone who has just deceived
investors into huge losses for their own investment banking fees benefit," said
Nader.
5. Nader also urged Spitzer to appoint a monitor to oversee Merrill Lynch's
compliance that has no ties to the securities or accounting industry.
Given the evidence that continued to flow in to Attorney General Spitzers
investigators and given the magnitude of the wrongdoing, Spitzer's concessions
to Merrill Lynch not only weaken his own enforcement action, but provide
gratuitous obstacles to innocent investors who are intent on securing
restitution for their losses," said Nader. "A tiny fraction of the losses by
investors directly attributable to Merrill Lynch's deceptions is encompassed in
the fine of $100 million that goes not to investors, but to the states."
At a swank political dinner in Washington recently, the joke circulating was
that there is a new axis of evil: Enron, Arthur Anderson and Merrill Lynch. For
millions of retirees, workers and investors, this is no joke. Just weeks ago,
the cover page of Business Week asked "How corrupt is Wall Street." The article
inside answered the question by demonstrating that Wall Street is seriously
corrupt.
Even as Spitzer is inking a deal to absolve Merrill Lynch of ultimate
responsibility for duping investors, Congress has not even begun to seriously
address reforms that would ensure that Enron, Arthur Anderson, Merrill Lynch and
other corporate misdeeds are not repeated.
Nader called for Congress, the SEC and the Attorneys General to get behind the
following reforms as the only way to protect investors:
A. Total public funding of all elections. No more Enron-purchased politicians.
B. Restore New Deal protections that investors, retirees, savers and workers are
entitled to. The shredding of the New Deal investor and retiree safety net begat
Enron, Anderson and Merrill Lynch. Repeal all legislation that has undermined
New Deal safeguards in the last decade: consumer, securities, and banking
deregulation in particular must be reversed. Broaden protections to encompass
evolving financial institutions that did not exist during the New Deal.
C. Demand Globalization of investor and retiree protections. Financial
statements must be understandable and comprehensive around the globe; firms that
violate this prerequisite to investing must be subject to criminal penalties and
lose access to American financial markets.
D. Get tough on corporate crime. Heightened criminal penalties for financial
crimes equal to the toughest federal and state penalties for street crimes
related to property and not involving violence.
E. An Independent Prosecutor for Merrill Lynch, Enron, Global Crossing and
progeny. An Independent Prosecutor is needed for any situation where the
majority of either Congress or the lead investigating committee has received
contributions from either the target or its accounting firm or underwriters.
In addition, Nader said there was a critical need for investors to band together
and organize their own Financial Consumer Associations (FCAs) as watchdogs to
represent them before regulatory bodies and in the courts in negotiations with
securities firms and other financial services providers. The FCAs would be
nonprofit, nonpartisan organizations supported by member dues and receive no tax
money. The members would elect a board of directors which could hire
researchers, organizers, accountants and lawyers.
usnewswire.com -0- /U.S. Newswire 202-347-2770/ 05/21 16:22
Copyright 2002, U.S. Newswire
CONTACT: Ralph Nader, 202-387-803
Copyright (C) 2002, U.S. Newswire
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