Firms, Regulators May Be Near Deal

Government regulators and Wall Street investment banks are nearing agreement on a comprehensive settlement of probes into tainted stock research and could announce a tentative deal within the next few days, a source close to the matter said Wednesday.

Regulators have engaged in feverish negotiations this week with a handful of brokerage firms that had been reluctant to pay the penalties sought by regulators. Some of the recalcitrant firms have altered their positions in recent days, increasing the chances that an overall accord could be unveiled soon.

The regulators and a dozen firms are negotiating a “global” settlement that would resolve state and federal probes of allegedly biased stock research.

The deal would call for the companies to pay a collective $1 billion in fines and to implement a series of reforms. In return, regulators would drop their investigations and forgo the filing of legal cases.

The two sides have strong incentives to reach a deal. The firms want to put a public-relations debacle behind them, and regulators want to quickly finish the time-consuming probes.

Regulators recently have been nearing agreement with several major firms, such as Citigroup Inc. and Credit Suisse First Boston. But a band of roughly half a dozen mid-tier firms, including Lehman Bros. Holdings and UBS Warburg, had been reluctant to pay the roughly $50 million in fines asked of them, sources have said.

Some of those six firms have raised their settlement offers in the last few days. That came after regulators warned late last week that they would pursue investigations aggressively if the brokerages did not become more accommodating.

It is uncertain whether all 12 firms could reach accords with regulators. An announcement could say that regulators have reached agreements in principle with a majority of companies, but that a handful of others are still holding out, the source said.