PRESS RELEASE FOR IMMEDIATE RELEASE

Contact: James B. Ropp – Securities Commissioner

Attorney General’s Office, Division of Securities

Phone: (302) 577-8925

Date: November 26, 2002

(Wilmington, DE): Attorney General M. Jane Brady announces that her Securities Division has entered into an agreement with brokerage firm Merrill Lynch, Pierce, Fenner & Smith, which resolves Delaware’s portion of a multi-state investigation examining research analyst conflicts of interest and claims of biased research.

"This agreement requires a significant change in the way Merrill Lynch does business. Consumers will be better served by these requirements," commented Attorney General Brady.

As part of the agreement, Merrill Lynch, Pierce, Fenner & Smith ("Merrill") paid $500,000 to the State of Delaware Investor Protection Fund. The Fund is a source of funding for enforcement of The Delaware Securities Act and enforcement actions involving investment frauds and scams as well as funding for investor education programs.

Individual investors can seek restitution for any harm they believe was caused by Merrill research by initiating an arbitration action or civil suit. For information on how to file an arbitration claim, investors can access the North American Securities Dealer Association (NASD) website at www.NASD.com or by telephone at (215) 665-1180.

In addition to the imposition of a fine, the settlement agreement requires Merrill to enact certain reforms and safeguards to prevent and prohibit future conflict of interest situations between Merrill’s investment banking group and its research analyst group. These reforms include:

• disclosure of potential conflicts in research reports;
• the separation of the investment banking group from decisions to determine compensation for research analysts;
• the prohibition of consideration of factors such as analyst participation in investment banking transactions in determining an analyst’s compensation;
• the prohibition of investment bankers from evaluating analysts based upon work done by the analyst to generate investment banking business, including participation in investment banking client solicitations;
• the prohibition of investment bankers from communicating with analysts or their superiors for the purpose of calculating or influencing decisions on analyst compensation;
• the requirement that the research department have exclusive responsibility to determine analyst compensation based primarily upon factors such as:

1. quality of analysts’ research and performance of their investment recommendations;
2. competitive compensation factors;
3. surveys and input from investor clients; and
4. surveys and input from Merrill’s institutional sales, equity trading, and private client divisions, but not from the investment banking division.

These safeguards included in the agreement are intended to eliminate the conflicts of interest between investment banking interests and research analysts and are intended to prevent attempts by investment bankers to influence research reports.

The Delaware Securities Division is participating in a multi-state task force investigating similar conduct by other brokerage firms. It is expected that these investigations will result in similar reforms ensuring investment research free of bias and conflicts of interest.