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The Internet got Merrill Lynch & Co. into the analyst-disclosure mess, and the Internet may well get it out in the wake of the investment bank’s agreement Friday morning with the New York attorney general’s office. Merrill agreed Friday to create a Web site by April 24 that will list all of the relevant banking relationships with companies it has dealt with or covered in its research reports in the past 12 months. By June 3, New York-based Merrill will include the same information directly in its research reports. Also by June 3, Merrill will state on the cover of every research report that investors should assume Merrill is seeking, or will seek, investment banking business from the covered company. Still not resolved, however, is the question of fines. Merrill is still negotiating with New York Attorney General Eliot Spitzer about what kind of fine, if any, the bank will have to pay, according to people familiar with the talks. Merrill is resisting a fine because it would set a precedent for the other 49 states, these people said. Assistant Attorney General Eric Dinallo started investigating Merrill 10 months ago on charges that the bank’s analysts wrote glowing reports about stocks they denigrated in internal e-mails. On April 8, Spitzer obtained a court order forcing Merrill to disclose all of its relevant banking relationships — present and potential — in its research reports. At the time, Merrill vehemently denied Spitzer’s allegations, calling them “just plain wrong,” and eventually negotiated an extension until April 19. In a statement Merrill said, “This disclosure far exceeds the industry standard.” Merrill is right about that, though other investment banks may have to follow suit. Spitzer’s office is investigating every big bank on Wall Street, but it will take months to subpoena and review the internal e-mails at all of Wall Street’s giants, several Wall Street professionals said. �Copyright 2002, The Deal, LLC. All Rights Reserved.

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