Office of Financial and Insurance Services Commissioner Linda A. Watters today announced that Michigan stands to receive $12.6 million as a result of settlement between securities regulators and Wall Street firms related to alleged conflicts of interest at brokerage houses. The allegations were leveled against brokerage houses where analysts recommended stocks due to improper influence from their investment banking colleagues.

"Any action that restores consumer confidence in the financial markets and punishes companies that have shunned corporate responsibility standards is a good thing for Michigan," said Governor Jennifer M. Granholm. "Part of this settlement also will help educate investors here in our state, allowing them to make more informed decisions about their portfolios and other investments."

"It's our hope that this settlement will change the way business is done on Wall Street, and that as a result wary and mistrustful investors will return to our markets, " said Watters. "The industry reforms agreed upon in this settlement will provide for more objective research and stronger protections for investors, which is the true benefit to this settlement."

Under the terms of the settlement the firms are also required to distribute $30 million over a period of five years to the Investor Protection Trust (IPT). The money will be used to fund investor education initiatives on the state and national levels. The IPT is an established charitable organization with experience handling settlement funds and a history of investor education successes.

North American Securities Administrators Association President Christine Bruenn, Securities and Exchange Commission Chairman William H. Donaldson, New York Attorney General Eliot Spitzer, NASD Chairman and CEO Robert Glauber, New York Stock Exchange Chairman and CEO Dick Grasso, and state securities regulators announced the completion of the enforcement actions at a press conference at the SEC today, implementing the global settlement in principle reached and announced by regulators last December.

That settlement followed joint investigations by the regulators of allegations of undue influence of investment banking interests on securities research at brokerage firms, and the enforcement actions announced today track the provisions of the December global settlement in principle. The ten firms against which enforcement actions are being announced today are:

· Bear, Stearns & Co. Inc. ("Bear Stearns")
· Credit Suisse First Boston, LLC ("CSFB")
· Goldman Sachs & Co. ("Goldman")
· Lehman Brothers, Inc. ("Lehman")
· J.P. Morgan Securities, Inc. ("J.P. Morgan")
· Merrill Lynch, Pierce, Fenner & Smith, Incorporated ("Merrill Lynch")
· Morgan Stanley & Co. Incorporated ("Morgan Stanley")
· Citigroup Global Markets Inc. f/k/a Salomon Smith Barney, Inc. ("SSB")
· UBS Warburg LLC ("UBS")
· U.S. Bancorp Piper Jaffray Inc. ("Piper Jaffray")

In 2001 and early 2002, Congress and the SEC were examining the issue of analyst conflicts of interest. In April of 2002, the New York Attorney General's office announced an enforcement action against Merrill Lynch based on internal emails it uncovered that showed analysts were pressured to issue bullish stock recommendations to please investment banking clients. Soon afterward, regulators from the states, industry self-regulatory organizations and the SEC formed a joint task force to investigate Wall Street's leading investment banks. In December regulators announced an agreement in principle with the firms. Today's announcement marks the finalization of that agreement.

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