Merrill Lynch eventually replaced a research analyst whose sceptical coverage of Enron had caused the energy company's senior executives to threaten to leave Merrill out of a $750 million (€766 million) stock offering, according to Senate investigators.
The memos and e-mails, which will be made public at a congressional hearing today, show how two Merrill bankers urged Mr Herbert Allison, Merrill Lynch's president, to intervene in the stock offering deal.
This is the first time a Merrill official as senior as Mr Allison has been directly tied to the Merrill analyst scandal.
Senate insiders said Mr Allison contacted Enron's senior managers - including Mr Kenneth Lay, then the chief executive - and got Merrill back in on the deal.
Four months later, however, Mr John Olson, the analyst who had downgraded Enron and was the cause of the dispute, left Merrill Lynch and was replaced by Mr Donato Eassey, who quickly upgraded Enron's equity rating.
The revelations are the latest embarrassment for Merrill, whose equity analysts have come under intense scrutiny for boosting questionable stocks.
Merrill would not comment on Mr Olson's tenure with the firm, citing its policy of not discussing personnel matters.
A Merrill spokesperson insisted its research "was never compromised".
The latest incident centres on Mr Schuyler Tilney, who was married to a senior Enron executive and was managing director of Merrill's Houston-based global energy and power division.
On April 18th, 1998, Mr Tilney was one of the authors of a memo to Mr Allison saying that Merrill had been left off the $750 million offering because of Mr Olson's ratings.
- (Financial Times Service)
