Eyebrows Raised After Merrill Downgrade

Merrill is house broker to WPP. The firm downgraded its forecasts for the advertising agency just hours before the company itself issued a profits warning. The timing of the note is now being questioned. Although there is no suggestion that Merrill was acting on priviledged information, in the current suspicious climate the timing of the note is unfortunate.

The Independent quoted an unnamed analyst who said: 'This would give Merrill Lynch clients time to get out or short the stock before the profits warning. The house broker usually downgrades after a profits warning, not just before it.'

A spokesman for Merrill said that any suggestion that Merrill was using inside information was absurd and claimed that the call was just down to the fact that the firm had excellent analysts.