“Taking the first step in its broad investigation of possible conflicts of interest among stock analysts, the Securities and Exchange Commission has asked about a dozen Wall Street firms for detailed information about their research practices, people involved in the inquiry said today,” writes Stephen Labaton in today’s New York Times.

“The letters, sent to every major firm on Wall Street, were described by one person involved as requesting voluntary assistance. However, the agency may issue subpoenas if the letters fail to produce material sought by lawyers in the enforcement division.”

“Although the chairman of the S.E.C. says he has no intention of stepping on a separate inquiry into analysts’ practices by the New York State attorney general, signs emerged today that a collision might be inevitable.”

” ‘I have said repeatedly that every state has its own rules and it is obviously within the province of state officials to pursue allegations of fraud in their jurisdiction,’ Harvey L. Pitt, the S.E.C. chairman, said in an interview. But he added that he has consulted the New York State attorney general and other state securities regulators and industry organizations because ‘only the federal government can set nationwide standards.’ “

“Late today, the New York attorney general, Eliot L. Spitzer, restated his determination not only to puruse possible wrongdoing, but also to propel industry changes. “We will continue to vigorously proceed with our case against Merrill Lynch, while viewing this matter as a possible catalyst for broader structural reform in the securities industry,” he said.”

“Last week the securities commission announced that it would begin a broad inquiry to see if any laws were violated and to determine whether any rules ought to be written to deter conflicts among stock analysts. The announcement followed disclosures from an investigation by Mr. Spitzer, who says the information he has gathered demonstrates that Merrill Lynch analysts knowingly provided misleading recommendations to curry favor with the firm’s corporate clients.”

“Merrill’s top executive apologized last Friday for the behavior of some analysts and vowed to punish anyone who violates company rules.”