A number of Wall Street stock analysts could face criminal charges in an investigation into possible conflicts of interest between the broking and investment banking arms at some leading finance houses, according to today's Financial Times.
Today's FTsaid the New York attorney-general Mr Eliot Spitzer has widened his investigation into the independence of Wall Street analysts, ordering several other investment banks to hand over documents relating to the probe.
Credit Suisse First Boston and Morgan Stanley, are among those ordered to disclose documents, the article claims.
Mr Spitzer also left open the possibility that criminal charges could be laid against banks and analysts. "The entire range of possibilities is there," he is quoted as saying.
On Monday, Merrill Lynch, the world's biggest brokerage, was accused by Mr Spitzer of privately disparaging companies while publicly telling investors to buy the shares.
Mr Spitzer ordered an investigation into Merrill Lynch after receiving several complaints from investors about stock recommendations.
They include references to companies such as InfoSpace, a company that syndicates internet and wireless content, as being a "piece of junk."
Mr Henry Blodget, Merrill's high-profile internet analyst who left the bank last year, had been bullish on InfoSpace even as the stock started to fall from its peak of $132 in March 2000. Yesterday the stock was trading at $1.46.
Mr Spitzer also accused Merrill of paying its research analysts to recruit new investment banking customers.
Merrill insists that it has done nothing wrong and that its e-mails have been taken out of context. In a strongly-worded statement, Merrill said: "There is no basis for the allegations made by the New York Attorney General. His conclusions are just plain wrong. We are outraged that we were not given the opportunity to contest these allegations in court."
Merrill claimed that the e-mails had been "taken out of context".
Mr Spitzer is trying to force Merrill to add "health warnings" to its published research to point to possible conflicts of interest. Merrill has appealed against the move and has won a stay until tomorrow.