Merrill Fires 2 Senior Officials

NEW YORK —  Merrill Lynch & Co. fired two senior officials Wednesday for what the company said was their refusal to cooperate with government probes into the downfall of Enron Corp.

The men are two of the highest-profile brokerage executives to lose their jobs in what has become a series of interlocking corporate scandals on Wall Street.

Merrill terminated Thomas W. Davis, a vice chairman who was chief of global stock research and who previously had overseen the firm’s investment banking business. Davis was one of two Merrill executives who held the title of vice chairman.

The brokerage also let go Schuyler Tilney, who headed Merrill’s energy industry investment banking.

In a statement, the firm said the men violated company policy by refusing to testify in investigations by the Justice Department and the Securities and Exchange Commission into Merrill’s work in helping to finance Enron. A Merrill spokesman declined additional comment.

Davis’ attorney did not return a phone call; Tilney could not be reached for comment.

The terminations follow by less than two weeks Citigroup Inc.’s removal of Michael Carpenter as head of the firm’s Salomon Smith Barney brokerage unit. The company reassigned Carpenter amid investigations into Salomon’s business dealings with Enron and congressional hearings on the conduct of analyst Jack Grubman.

Grubman resigned last month as regulators probed his bullish recommendations of telecom stocks even as the shares plummeted.

Outside experts saw Merrill’s moves Wednesday as intended to show the firm is punishing those responsible for possible abuses.

“The analogy is to any professional sports team that has negative developments,” said Michael Holland, head of a New York investment firm that bears his name. “People are the obvious targets, whether it’s the manager of a baseball team or a senior person at a financial services firm. It shows action” being taken by the company.

Some experts questioned whether the firings would improve Merrill’s image with regulators.

Davis, 49, previously had announced his intention to retire next month. In July, Tilney refused to testify before a Senate panel investigating Enron and had been placed on administrative leave.

“Two months after Schuyler Tilney took the Fifth Amendment, Merrill Lynch has discovered that he didn’t cooperate in a public investigation,” said John Coffee, a Columbia University securities law professor. “Merrill recognizes that the storm is not subsiding and they can’t simply tough it out. They must take corrective action.”

Wall Street’s relationship with Enron has come under intense scrutiny by Congress and criminal prosecutors. Their investigations center on whether large investment banks intentionally helped the energy company deceive investors by structuring deals that underplayed Enron’s debt and overstated its earnings.

Merrill said in its statement that it “is not aware of any evidence that its employees acted improperly in their dealings with Enron.”

Merrill’s image has been hit this year by a number of controversies concerning its conduct. In spring the firm paid $100 million to settle a probe into its research practices by the New York attorney general.

Last week, an indictment of former Tyco International Ltd. Chief Executive L. Dennis Kozlowski alleged that he pressured Merrill in 1999 to replace its Tyco analyst with someone preferred by Kozlowski. Merrill has said the new analyst was hired for his expertise.