“Henry Blodget, the former Internet analyst at Merrill Lynch, and Jack B. Grubman, the former telecommunications analyst at Salomon Smith Barney, are expected to pay almost $20 million in fines and penalties and agree to be barred permanently from the securities industry today, according to a person briefed on the investigation,” writes Landon Thomas in today’s New York Times.

“The sanctions are to be disclosed when regulators announce the final agreement in the $1.4 billion investment banking research settlement.”

“Mr. Blodget is expected to pay a $2 million fine and $2 million in ‘disgorgement’ under a settlement with the Securities and Exchange commission, NASD and the New York Stock Exchange. He will not admit or deny the regulators’ allegations of securities fraud, the person said.”

“Mr. Grubman will pay $15 million to make his settlement with NASD without admitting or denying wrongdoing.”

“The former analysts are the only individuals who are expected to be part of the settlement into conflicts among Wall Street stock research analysts. “

“Mr. Blodget did not respond immediately to telephone messages. Mr. Grubman could not be reached yesterday.”

“Eliot Spitzer, the New York State attorney general, and William H. Donaldson, the chairman of the S.E.C., will hold a news conference today in Washington to announce the industry settlement formally. The formal charges and settlement agreement will be filed in Federal District Court in Manhattan this morning. “

“The broad outline of the settlement was announced last December when 10 securities firms agreed to pay $1.4 billion to resolve charges that many of their research analysts issued overly bullish reports in order to generate investment banking business. Citigroup, which agreed to fines and payments of $400 million, and Credit Suisse First Boston, which agreed to pay $200 million, together with Merrill Lynch (which paid $100 million), will see the word ‘fraud’ used to describe their practices during the stock market boom. Seven other firms will also make payments, ranging from $50 million to $125 million. Salomon Smith Barney recently was renamed Citigroup Global Markets.”

“In addition to the settlement, new regulations to be announced today will forever change how business is done on Wall Street, although many firms have already instituted some of the new rules. Within firms, for example, investment bankers and analysts must be physically separated from one another and bankers will no longer be allowed to have any influence over how research analysts are compensated.”

“The volumes of new evidence to be released today — including internal company memos and e-mail messages — will most likely spur a fresh round of suits by individual investors. That documentation is expected to show in detail the extent to which research analysts at big Wall Street firms devoted the vast amounts of their time to supporting the efforts of their banking colleagues.”

“All of this should come as no surprise to top executives at the Wall Street firms. Indeed, they have spent the past four months negotiating every last sentence in the findings to do what they can to limit their liability. Still, despite having increased their legal reserves, experts estimate that the cost to firms for settling government and civil litigation could exceed $10 billion in the coming years.”