Merrill Lynch CEO Apologizes for E-Mails

The chief executive of Merrill Lynch & Co. apologized to shareholders Friday over a series of analyst e-mails that privately disparaged companies they publicly touted.

“The e-mails that have come to light are very distressing and disappointing to us,” CEO David Komansky said at the brokerage’s annual meeting.

“They fall far short of our professional standards, and some are inconsistent with our policies. I want to take this opportunity to publicly apologize to our clients, our shareholders and our employees.”

New York state Atty. Gen. Eliot Spitzer is using the e-mails to allege that Merrill, the No. 1 U.S. brokerage, misled investors in research reports on companies.

In a court filing April 8 after a 10-month probe, Spitzer alleged that Merrill’s Internet analysts recommended some stocks in 2000 and 2001 merely to help generate lucrative investment banking business for the firm.

“We applaud the company for taking this important first step in recognizing there is a problem,” a spokeswoman for Spitzer’s office said after Komansky’s apology. “Contrition has always been one of the critical first aspects to resolve this matter.”

Merrill remains in negotiations with Spitzer over the probe and possible penalties.

Komansky also said Merrill would adopt some new research policies but did not disclose what they might be. Merrill’s analyst compensation policy probably will not change, however.

“We have never compensated our analysts for any particular [investment banking] deal,” he said.

On Thursday, the Securities and Exchange Commission said it would launch a formal inquiry of Wall Street analysts’ practices, prodded in part by the Spitzer investigation.

Merrill shares inched up 88 cents to $43.38 on the New York Stock Exchange on Friday.