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To: Bob Kim who wrote (138907)	7/10/2001 10:02:19 AM
From: Road Walker	Read Replies (2) \| Respond to of 186894

Merrill Lynch to Prohibit Analysts From Buying Shares in Companies They Cover New Global Policy is Latest Step by Merrill Lynch to Set Industry Standard for Research Quality, Integrity and Independence NEW YORK--(BUSINESS WIRE)--July 10, 2001-- Merrill Lynch (NYSE: MER - news) today said it will prohibit its equity analysts from buying shares in companies they cover -- the latest in a series of industry-leading moves by the firm to further ensure the objectivity and independence of its research. The new policy is global and effective immediately. With this step, Merrill Lynch has become the first major firm to go beyond industry standards that allow analysts to own the securities of the companies they follow. ``This move underscores Merrill Lynch's commitment to setting the standard for objectivity, independence and quality of research,'' said Andrew J. Melnick, director of Merrill Lynch Global Securities Research & Economics. ``It is intended to strengthen investor confidence in the process analysts follow.'' To ensure the fair and orderly implementation of the new policy regarding pre-existing holdings, Merrill Lynch will give analysts who own stocks in their sector a brief window of time during which they may choose among the following three options: -- Elect to sell all their holdings, regardless of current investment ratings, to avoid the appearance of selective selling of their stocks. -- Transfer all securities positions in the stocks they follow to managed accounts over which they have no investment discretion. -- Maintain all positions but under new disclosure rules and stricter disposition policies. If analysts elect to hold all of their securities, they will now only be permitted to sell when both the intermediate- and long-term opinions are ``neutral'' or lower. Previously, the firm's policy required a ``neutral'' rating only in the intermediate term. As in the past, analysts must wait 24 hours after an opinion change to execute a trade. This new policy extends beyond just the analyst: it also includes members of the analysts' professional team (senior analysts, junior analysts and analysts' assistants) as well as their spouses and immediate members of their households. Further, Merrill Lynch also plans to disclose in research reports the existence of any equity position maintained by any analyst who has responsibility for a security discussed in the report; this disclosure will be without regard to the size of such position. The disclosure will appear on the back page of research reports and will say: ``One or more analysts responsible for the recommendation on this security maintains a position in this security.'' This disclosure is expected to begin appearing on reports by September 1. Merrill Lynch's Policies Reinforce Research Integrity The new policies are the latest in a series of steps Merrill Lynch has made as part of its ongoing quality review process, enabling the firm to offer high-quality, independent research to clients and enhance investor confidence in the marketplace. Last month, Merrill Lynch refined its investment-rating system to clarify its opinions, and expanded the role of its investment-review committees to ensure consistent application of the firm's research opinions across industries and sectors. The firm also adopted a disclosure policy of including, in boldface, on the front page of all research reports a statement that says: ``Merrill Lynch, as a full-service firm, has or may have business relationships, including investment banking relationships, with companies in this report.'' This is in addition to current specific disclosures of underwriting transactions and cross-directorships. Merrill Lynch has traditionally complied with or exceeded industry standards. For example, at Merrill Lynch the Corporate Strategy and Research division does not report to any business unit, but has reported for many years directly to the chief executive officer of the company. In addition, compensation to Merrill Lynch analysts, including bonus pools, is carefully separated from other Merrill Lynch business units and is determined by research management. ``Merrill Lynch regularly reviews its practices and procedures to ensure that it is providing independent research of the highest quality and value to our clients,'' Mr. Melnick said. ``We regard research as an intellectual resource that distinguishes our firm as an industry leader.'' Merrill Lynch has more than 850 analysts in 26 countries, covering over 3,500 companies world-wide. The firm has consistently achieved high rankings for its equity and fixed income research in numerous regional and global surveys, such as Institutional Investor, The Wall Street Journal, LatinFinance, Asiamoney, Euromoney and Reuters. Merrill Lynch is one of the world's leading financial management and advisory companies with offices in 44 countries and total client assets of about $1.6 trillion. As an investment bank, it is the top global underwriter and market maker of debt and equity securities and a leading strategic adviser to corporations, governments, institutions and individuals worldwide. Through Merrill Lynch Investment Managers, the firm is one of the world's largest managers of financial assets. For more information on Merrill Lynch, please visit www.ml.com. -------------------------------------------------------------------------------- Contact: Merrill Lynch, New York Susan McCabe, 212/449-0389 susan_mccabe@ml.com