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Merrill Lynch & Co. and other Wall Street banks negotiating with New York Attorney General Eliot Spitzer regarding analyst disclosure are now fighting a war on three fronts: New York, New Jersey and California. Spitzer announced Tuesday that he has united with New Jersey Attorney General David Samson and California’s Department of Corporations to co-chair a new national task force on securities law violations. The task force, as yet unnamed, will focus on investigating analyst conflicts at Wall Street firms. Spitzer’s office created a firestorm of controversy in March when it obtained a court order to require Merrill Lynch to disclose all of its banking relationships with companies that its research analysts cover. Merrill avoided a court action by striking a deal with the attorney general’s office but is still negotiating with Spitzer about potential fines. Merrill is trying to avoid a fine because it would set a precedent for the other 49 states, according to sources. In a statement Tuesday, Spitzer’s office said the attorneys general were creating the multistate task force with the help of the North American Securities Administrators Association. NASAA President Joseph Borg said in a statement that his organization’s board had voted to create the task force last week. Juanita Scarlett, a representative for Spitzer, said Spitzer had been talking to NASAA before the vote. NASAA was founded in 1919, but the analyst-disclosure conflict has been the organization’s most visible issue for the past few months. Most recently, the NASAA issued a release encouraging the Securities and Exchange Commission and the National Association of Securities Dealers to ban research analysts from attending investment banking road shows. Copyright (c)2002 TDD, LLC. All rights reserved.

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