DEBORAH MARCHINI, CNN ANCHOR: Merrill Lynch makes a move in the battle to clean up the Wall Street analyst's game. Hard to believe these regulations were not already in place, or were they? Chris Huntington joins me from the interpreter's desk now, with a look at what some new rules in place at Merrill Lynch really mean -- Chris.</s>CHRIS HUNTINGTON, CNN CORRESPONDENT: The issue is how reliable is the research that we get from Wall Street analysts. Now, Merrill Lynch has taken an important first step, jumping ahead of industry regulators, and indeed, its competition, coming out yesterday and banning its research analysts from owning the stocks that they cover. Now, this sounds like it's a big deal and an important step, to rid some of these analysts of potential conflicts of interest, but in fact, it's really a policy that has sort of almost been de facto in place in many firms. Indeed, the industry has already called on analysts to divulge their ownership or stakes in any companies that they cover. In fact, I think this move right now for Merrill is sort of grabbing a headline, and it's almost grabbing the low hanging fruit of the issues, because it's a no-cost, easy fix for the firm: It doesn't affect the firm's bottom line in any way; it really just clips the wings of the analysts; and it doesn't address the major conflict of interest, which is investment banking. Indeed, the major criticism of research analysts these days is that they are serving the investment banking divisions of their firms and not the investing clients. Why? Because investment banking brings in a whole lot more money than mom and pops with their 401(k)s -- Debbie.</s>MARCHINI: Yes, we've long noted the reluctance sometimes the firms to downgrade their investment banking clients.</s>HUNTINGTON: Absolutely.</s>MARCHINI: Thanks, Chris. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Merrill Lynch Will Ban Analysts From Owning Profiled Stocks