Salomon Adopts Merrill Settlement Reforms

Brokerage giant Salomon Smith Barney Inc. on Wednesday adopted the same structural changes--meant to enhance the independence of its research analysts--that Merrill Lynch & Co. agreed to in its settlement with New York Atty. Gen. Eliot Spitzer.

Salomon Chief Executive Michael Carpenter announced the changes in an internal e-mail sent to all employees. Carpenter wrote that the reforms embodied in the Merrill settlement, in combination with the rules recently approved by the Securities and Exchange Commission, “set a new industry standard necessary to maintain investor confidence and provide a useful template for the rest of the industry to follow.”

The changes include a prohibition on investment bankers influencing analysts’ compensation and creation of a research recommendations committee to oversee changes in ratings by analysts at Salomon, a unit of Citigroup.

Officials in Spitzer’s office praised the move, but said they would press ahead with their investigation of Wall Street business practices, which includes Salomon.