Plan to Discredit Spitzer Alleged
Merrill Lynch & Co. conducted an investigation early this year into whether a high-ranking executive at the giant brokerage firm tried to organize a media campaign to discredit New York Atty. Gen. Eliot Spitzer, people close to the matter said Thursday.
Merrill’s investigation centered on whether Thomas H. Patrick, who resigned Tuesday as Merrill’s executive vice chairman, had sought to fund production of a cable TV show that would disparage Spitzer and his efforts to police Wall Street.
At the time, Spitzer recently had concluded a highly publicized probe into whether Merrill stock analysts gave intentionally biased advice to investors. Merrill paid $100 million to resolve the investigation by Spitzer, who went on to lead a broader inquiry into Wall Street practices that resulted in a landmark $1.4-billion settlement.
Merrill hired a prominent New York law firm to conduct its internal investigation, one source said.
It is unclear what the investigation uncovered. However, Patrick was reprimanded and some of his oversight duties, including his supervision of communications and public affairs, were taken away, one source said.
Patrick, who headed an aggressive cost-cutting program that is credited with helping to bolster Merrill’s recent earnings, abruptly left his position as the firm’s second-highest-ranking executive. He could not be reached for comment late Thursday.
Patrick’s departure came after he angered E. Stanley O’Neal, Merrill’s chief executive, by lobbying to have Arshad Zakaria, Merrill’s investment-banking chief, named company president, one source said.
However, Patrick’s perceived role in the alleged effort to discredit Spitzer was an underlying factor, a source said.
A Merrill spokesman said the company did not try to discredit Spitzer. A cable TV show critical of the attorney general apparently was never produced.
“We reviewed the matter and concluded the matter was false,” Merrill spokesman Tim Cobb said. “In no event would we condone such an action. This matter had nothing to do with Mr. Patrick’s retirement.”
Bill Kurtis, a prominent Chicago-based documentary maker, said in March that he had met with Merrill executives to discuss a possible report on whether Spitzer, a state official, was overstepping his bounds by investigating a national financial issue. He said he pursued the issue after several people in Chicago’s financial community suggested it.
Kurtis, who hosts the weekly “American Justice” program on A&E; cable network, couldn’t be reached for comment Thursday. But he said in March that he wasn’t part of any orchestrated effort to discredit Spitzer.
He met in November with Merrill executives in New York to discuss the story, Kurtis said, but he stressed that he did not receive any payment from Merrill.
“We never discussed anything like that,” Kurtis said at the time.
He pitched a Spitzer story to A&E;, which rejected it, Kurtis said. Spitzer’s office never granted him an interview, Kurtis said.
The possibility that Patrick was involved in an alleged effort to discredit Spitzer was first reported Thursday by the New York Post.
Spitzer’s office is looking into the matter and has asked Merrill for information, said Spitzer spokesman Darren Dopp. “We’ve asked the company for clarification of these reports ... and they’re being helpful,” he said.
