One in the eye for Wall Street

Yes, you heard it correctly. An investment bank has apologised for its part in the dot-com bubble.

Merrill Lynch has agreed to pay $100m to various US state governments and regulators, which is nothing more than the cost of a bunch of flowers by investment banking standards.

But take heart - Wall Street will most likely be paying out a lot more over the next few years. This is the US, the most litigious society in the world, and you don't get away with an outrageous prank like the internet bubble without spending at least the next decade in pointless court cases.

Eliot Spitzer, the New York State Attorney General who brought the case, is naturally cock-a-hoop. He is already being talked up as a future President.

These pay-outs won't help anyone except the lawyers, though, unless they lead to extensive reforms of Wall Street and the way investment banking is done.

The very fact that analysts are allowed to write flattering research notes to woo new business for their IPO division is bad enough.

But that fact that they are actually encouraged to do it, getting extra pay for bringing in new IPO clients to the bank, is nothing short of a scandal.

As part of the settlement, Merrill Lynch has had to put some basic rules in place stop its analysts being exposed to too many corrupting influences.

But these are just the first step on what ought to be a long journey. The well-paid financiers of Wall Street and the City have let investors and hard-working people in the tech industry down very badly over the past five years and we are all feeling the pain.

So Eliot Spitzer, we salute you. We may not be able to prevent another stock-market bubble - but we shouldn't be paying analysts to inflate it.

For a profile of Eliot Spitzer see our top 50 list in our Agenda Setters 2002 special report - http://www.silicon.com/as2002