NEW YORK (CBS.MW) - Merrill Lynch confirmed it hired former New York City Mayor Rudy Giuliani, once an aggressive foe of Wall Street during his stint as a federal prosecutor, as an outside adviser as the firm negotiates to settle stock research conflicts with New York Attorney General Eliot Spitzer. Giuliani confirmed in an interview with the Wall Street Journal that he telephoned Spitzer two weeks ago, shortly before the attorney general announced the initial results of the state's Merrill (MER: news, chart, profile) investigation.
On Tuesday, The U.S. Justice Department said it's looking at Wall Street's stock analysts for possible conflicts of interest in their ratings and recommendations, and state securities regulators said they would form a multi-state task force to look into the issue. See full story.
"Merrill Lynch has retained Giuliani Partners to advise on all aspects of a resolution with the New York State Attorney General," Merrill said in a statement. "The issues presented in this matter are complex and require a comprehensive understanding of the market system. Rudy Giuliani has an extensive background in this area and has demonstrated his skills as an innovative problem solver and effective negotiator."
Merrill has also turned to Skadden, Arps, Slate, Meagher & Flom, Spitzer's old law firm, as an advisor on the issue. The brokerage has retained the firm in the past.
Shares of Merrill fell $1.69 to $45.45 on Wednesday.