“Lawyers for Merrill Lynch & Co. and New York Attorney General Eliot Spitzer agreed to a limited set of changes in Merrill’s stock-research procedures, even as talks about a broader overhaul to avert possible criminal charges against the firm stalled over the issue of money,” writes Charles Gasparino in today’s Wall Street Journal<.i>.

“Under Thursday’s interim accord, the big Wall Street firm promised to make some additional disclosures about its research involving corporate clients.”

“The pact was designed to lift a court order sought last week by Mr. Spitzer after a 10-month probe found numerous instances in which Merrill analysts privately voiced reservations about companies that the Wall Street firm was recommending to the public. Mr. Spitzer said the positive ratings were aimed at garnering investment-banking fees, but misled investors who lost money when the technology-stock bubble burst. Merrill denied the charges, and Mr. Spitzer sought a court order forcing Merrill to make some changes before a final settlement could be reached.”

“Thursday’s deal forces Merrill to create a Web site that will disclose investment-banking relationships for companies that the firm has issued research reports by Wednesday. By the beginning of June, the firm must replace the site by stating in research reports whether it has received or will receive investment-banking fees from companies that are the subject of corporate research. The firm must also state on reports that investors should ‘assume’ that Merrill is seeking or will seek investment-banking business from the company. In addition, Merrill must include how many buys and sells the firm has issued in various industry sectors.”

“The pact, approved by state Supreme Court Judge Martin Schoenfeld, is separate from the firm’s broader settlement talks with the attorney general’s office. Mr. Spitzer is threatening the firm with possible criminal charges for misleading investors with overly optimistic research that Mr. Spitzer says was published to help the firm win lucrative investment banking work. Merrill denies the charges.”

“The broader settlement talks between Merrill and Mr. Spitzer hit a snag Thursday following comments from company officials that Merrill wouldn’t be willing to pay $100 million to settle charges that it misled investors with its analysts’ research, people close to the negotiations say.”

“But people with knowledge of the talks say that money has become a major sticking point and could delay a settlement until next week. Some people close to the negotiations add, however, that while the talks hit a snag, the situation is fluid and the two sides could reach an agreement on Friday.”