Jenny Anderson of The New York Times notes that Merrill Lynch chief operating officer Gregory Fleming issued a memo to employees after The Wall Street Journal ran a correction Monday about a front-page article on the company earlier this month.
The memo stated, “In the past few weeks, we have witnessed a shift in negative headlines away from Merrill Lynch. I am extremely pleased to tell you that today the Wall Street Journal acknowledged that the front page story it recently published on Merrill Lynch was based on incorrect information. The Journal issued the following correction:
“This article was based on incorrect information that the Merrill Lynch & Co. had engaged in off-balance-sheet deals with hedge funds in a possible bid to delay the recognition of losses connected to the firm’s mortgage-securities exposure. In fact, Merrill proposed a deal with a hedge fund involving $1 billion in commercial paper issued by a Merrill-related entity containing mortgage securities. In exchange, the hedge fund would have had the right to sell the mortgage securities back to Merrill after one year for a guaranteed minimum return. However, Merrill didn’t complete the deal after the firm’s finance department determined it didn’t meet proper accounting criteria. In addition, Merrill says it has accounted properly for all its transactions with hedge funds.
“The Wall Street Journal simply should never have written the story that it did, which is why it agreed to issue a rare correction of a page-one story.”
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