Merrill Lynch has been fond of remind ing us that it is “bullish on America.” But evidence is now emerging that the giant brokerage firm may have been even more bullish on something else: propping up Enron in order to win more investment banking business.
Congressional investigators said this week that Merrill Lynch fired one of its analysts four years ago because he was skeptical of Enron’s business dealings and refused to issue rosy predictions about the company’s stock price. The investigators allege Merrill Lynch officials were convinced that the analyst’s reservations about Enron resulted in the firm’s not receiving enough of Enron’s banking business. Those same investigators detailed other instances in which Merrill Lynch allegedly compromised its ethics on behalf of Enron.
Merrill Lynch officials naturally deny acting improperly on Enron’s behalf. But it is worthy of note that two of Merrill Lynch’s investment bankers who were called before the Senate Permanent Subcommittee on Investigations on Tuesday declined to testify, citing their Fifth Amendment right against self-incrimination.
No wonder investor confidence has never been lower. If one of the world’s most respected brokerage houses is more concerned about making millions than it is about telling the truth to its clients, then the public can’t be faulted for fleeing the stock market.
Merrill Lynch’s apparent desire to be bullish on Enron goes a long way toward explaining why Americans continue to be bearish on stocks.