“Regulators investigating analysts’ conflicts of interest are planning to use a $100 million fine levied against Merrill Lynch & Co. by New York State Attorney General Eliot Spitzer as a benchmark for fines against other companies scrutinized as part of regulators’ broad inquiry, people with knowledge of the matter say,” writes Charles Gasparino in today’s Wall Street Journal.

“The development comes as regulators and Wall Street firms continue to discuss the broad outlines of the settlement, including millions of dollars in fines against major brokerage firms. Both Mr. Spitzer’s office and the Securities and Exchange Commission are pushing a plan that probably will include the creation of a panel — paid for by Wall Street — that will finance independent research on stocks, as well as fines against major players under scrutiny.”

“Firms may also be forced to fund a restitution fund to repay small investors who were misled into buying stocks with hyped research on investment-banking clients. All together, Wall Street could pay between $1 billion and $2 billion to settle the investigation.”

“A key meeting occurred Tuesday, as officials from the New York attorney general’s office, the SEC and other regulators started analyzing evidence against the big Wall Street firms in order to come up with fines for each firm under investigation, people with knowledge of the matter say. Regulators could propose to firms how much they will be fined by the end of the week, these people add.”

“The meeting is certainly a critical one for all of Wall Street, but even more so for Citigroup Inc., and its Salomon Smith Barney brokerage unit. For a good part of the year, Citigroup has come under withering criticism over the research of its former telecommunications analyst, Jack Grubman. But recently, some of the regulatory focus has shifted toward Citigroup CEO Sanford Weill as well.”

“For example, Mr. Spitzer is investigating what role, if any, Mr. Weill played in Mr. Grubman’s surprising upgrade of AT&T Corp., in late 1999, just before Salomon won a role in a major AT&T stock deal. At the time, Mr. Weill was an AT&T board member. In recent weeks, Mr. Spitzer has told lawyers for Citigroup that the interests of the company and Mr. Weill may have diverged, and that he should seek his own lawyers, a spokesman for the office said.”