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Merrill Lynch To Adopt Reforms

Sep 3, 2002 | AP

Merrill Lynch & Co. said Tuesday it will adopt all reform measures under a settlement with New York Attorney General Eliot Spitzer even if the few remaining states don't sign onto the deal.

About 40 states have now adopted the landmark $100 million settlement announced in May and other adoptions are "imminent," according to the North American Securities Administrators Association.

Merrill Lynch spokesman William Halldin wouldn't say if the nation's largest brokerage will commit to the $100 million penalty if Spitzer fails to get all states on board as required under the settlement.

Critics of Spitzer's settlement warned there would be no true reform or penalty because it would be difficult to get all states as well as Puerto Rico and the District of Columbia to agree to the settlement.

"We're committed to implementing all the policy changes in the settlement agreement," Halldin said. "We already have implemented many of them and are in the process of implementing all of them."

In May, Spitzer secured a settlement with Merrill Lynch to reform its analysis so research for investors wasn't compromised by efforts to secure investment banking business from companies analysts rated. Merrill Lynch also agreed to a $100 million penalty and several brokerages have since adopted policies to separate analysts from investment banking.

New York would get half the settlement and the other states would share the balance.

"Clearly, Merrill Lynch has made a concerted effort to follow through in implementing the details," said Spitzer spokesman Darren Dopp. "We commend them for that. We were looking for a good faith effort and they certainly have done that and more. Clearly they want to be a leader in restoring peoples' trust in the market."

Dopp said Tuesday that states continue to sign on and he anticipates the reforms and the penalty will be enacted even if all states don't join.

"Should one or two states not sign on, we don't anticipate that being an impediment for the deal," he said.

"We have about 40 agreements in hand and there are a number that are imminent," said Ashley Baker, a spokesman for securities law enforcers' group, whose members are considering the Spitzer deal. "We are working with the rest on largely language issues."

Baker said Tuesday the organization remains optimistic that all 50 states as well as the District of Columbia and Puerto Rico will join the settlement.

If a state doesn't agree to the reforms, that state could pursue a separate settlement with Merrill Lynch.

One of the key remaining states is Florida.

"It should not be read as a problem," said Don Saxon, Florida's Division of Securities director. "We are simply reviewing it to make sure that, among other things, it conforms with our legal procedures and the way we do things in the state of Florida. And we want to make sure that proposal is what we believe is in the best interest of all concerned in the state of Florida."

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