The North American Securities Administrators Association (NASAA) released the following statement today (May 21, 2002) after New York Attorney General Eliot Spitzer announced a settlement agreement with Merrill Lynch on behalf of New York, the other states, the District of Columbia and Puerto Rico.

“New York Attorney General Eliot Spitzer performed a public service by highlighting the issue of analysts` conflicts of interest,” said Marc Beauchamp, executive director of NASAA. “The action he brought and its settlement today will serve to strengthen investor confidence and lead to a fairer marketplace.

“The Attorney General`s staff has worked long and hard on this investigation, uncovering important evidence that helped spur the inquiry into analysts` conflicts of interest by the states, the SEC, the NASD and the New York Stock Exchange. NASAA`s leadership commends the New York Attorney General for his efforts, and the work of the staff of the Investor Protection and Securities Bureau, led by Eric Dinallo.

“NASAA`s U.S. members will now evaluate this settlement agreement. This historic agreement is the result of weeks of intense and difficult negotiations and many thousands of man-hours of painstaking effort by the Attorney General`s Office.

“We think it`s a good settlement and will be urging members to carefully consider it and will recommend they sign on to it. First, there is the amount of the fine, which is very significant. Second, there are the innovative and significant reforms that Merrill Lynch, the largest retail brokerage firm on Wall Street, will implement as part of the settlement. Third, there are the industry-wide rule changes recently adopted by the SEC, and those that may yet come as a result of this and other investigations. Finally, there is the tremendous investor education that`s occurred since the Attorney General released the emails he found. Henceforth, investors, we expect, will be more skeptical, more questioning of analyst research–and see it as a single piece of a larger puzzle they need to piece together before making an informed investment decision.”