Securities and Exchange Commission
Litigation Release No. 18115 / April 28, 2003
Securities and Exchange Commission v. Merrill Lynch, Pierce, Fenner &
Smith Incorporated, 03 CV 2941 (WHP) (S.D.N.Y.)
Securities and Exchange Commission v. Henry M. Blodget, 03 CV 2947
(WHP) (S.D.N.Y.)
SEC SUES MERRILL LYNCH AND HENRY M. BLODGET FOR RESEARCH ANALYST
CONFLICTS OF INTEREST FIRM AND BLODGET TO SETTLE WITH SEC, NASD, AND
NYSE
The Securities and Exchange Commission announced today that it has
settled charges against Merrill Lynch, Pierce, Fenner & Smith
Incorporated, a New York-based brokerage firm and investment bank, and
former Merrill Lynch research analyst Henry M. Blodget arising from an
investigation of research analyst conflicts of interest. Merrill Lynch
and Blodget have agreed to settle enforcement actions and proceedings
brought by the Commission, NASD, Inc., and the New York Stock
Exchange, Inc. ("NYSE"). These settlements are announced along with
global settlements reached between nine other brokerage firms and the
Commission, NASD, NYSE, the New York Attorney General, and other state
regulators.
As part of its settlement, Merrill Lynch has agreed to pay $100
million in penalties, to be deemed satisfied by Merrill Lynch's $100
million payment to state securities regulators last year arising from
similar conduct. Merrill Lynch also will pay, over five years, $75
million to provide the firm's clients with independent research, and
$25 million to be used for investor education. In the SEC action,
Merrill Lynch has agreed to a federal court order that will enjoin the
firm from future violations of the federal securities laws and NASD
and NYSE rules, and require the firm to make changes in the operations
of its equity research and investment banking departments.
In his settlement, Blodget has agreed to pay $2 million in penalties
and an additional $2 million disgorgement, all of which will be placed
into a distribution fund for the benefit of customers of Merrill
Lynch. In the SEC action, Blodget also has agreed to a federal court
order that will enjoin him from future violations of the federal
securities laws and NASD and NYSE rules. Blodget also has agreed to be
barred from associating with any broker, dealer, or investment
adviser.
In connection with these matters, the Commission today filed separate
complaints against Merrill Lynch and Blodget in the U.S. District
SNIPPETS:
Securities and Exchange Commission
SEC SUES MERRILL LYNCH AND HENRY M. BLODGET FOR RESEARCH ANALYST CONFLICTS OF INTEREST FIRM
The Securities and Exchange Commission announced today that it has settled charges against
Merrill Lynch and Blodget have agreed to settle enforcement actions and proceedings brought
These settlements are announced along with global settlements reached between nine other
In the SEC action, Merrill Lynch has agreed to a federal court order that will enjoin the
In connection with these matters, the Commission today filed separate complaints against
According to the Commission's Complaint against Merrill Lynch, from at least July 1999
The Complaint also alleges that Merrill Lynch published false or misleading research,
the Commission's Complaints allege that * Merrill Lynch's investment banking division unduly
For example, while working on the initial research report for GoTo.com, a Merrill Lynch
For example, a Merrill Lynch research report in September 2000 provided a favorable rating
The final judgment also orders the firm to make the payments described above.
This review will be conducted eighteen months after the date of the entry of the Final
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