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Wall Street settlement hits ‘wording’ snag

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ALBANY, N.Y. — The wording of a critical document in the landmark settlement announced in December to end conflicts of interest among stock analysts could delay the signing of the document, a regulator said Thursday.

But that delay should be no more than a couple weeks because the dispute over wording of the "charging document" of evidence and accusations appears minor and there is no dispute over its content, said Darren Dopp, spokesman for state Attorney General Eliot Spitzer. The deal is now expected to be final in late January or early February, he said.

The difference of opinion is between Spitzer's office and the National Association of Securities Dealers. Neither side said the settlement is in jeopardy.

NASD spokeswoman Nancy Condon said, "We have had a good cooperative relationship, and we'll continue to have a cooperative relationship." She declined further comment over what she said was a confidential document.

The NASD, a Wall Street regulator, has suggested what could be considered tougher wording than the by-the-book legal phrasing preferred by Spitzer. Tougher wording could be seen as a help to investors already suing firms or planning suits to recover losses based on the findings of the investigation.

As part of the settlement, the firms neither admitted nor denied that they misled investors — a key element for the companies and a major concession by Spitzer who had once sought statements of contrition.

In one example, the NASD sought to use the words "boosterism" and "enthusiasm" to describe how a star stock analyst, Jack Grubman, recommended stocks that private e-mails were privately considered risky.

"I've heard those things before," Dopp said of the example. "It's a word here, a word there."

Columbia law professor John Coffee, a longtime Wall Street observer, said no matter how tough the wording is, the settlement won't be an insurmountable weapon for investors suing brokerages. He said that's because there is no admission of guilt and the settlement was done without the rigor of a court proceeding.

Spitzer embarrassed some Wall Street regulators when he announced his investigation last year of conflicted stock research that appeared to be used during the street's 1990s "bubble" to lure firms as investment banking clients. Spitzer said countless individual investors were harmed. He has since received national attention as Wall Street's most feared regulator, called the street's "sheriff" in one report.

In December, the nation's top brokerages agreed to the landmark settlement in which they would pay more than $1.4 billion to resolve charges they gave biased ratings on stocks to help win investment banking business. The settlement calls for 10 firms, including Citigroup, Goldman Sachs and Credit Suisse First Boston, to pay fines, sever the links between research and investment banking, and fund independent stock research for investors that would complement their own analysts' work.