Merrill Lynch (NYSE:MER)will pay a $100 million US fine to settle allegations that the brokerage's analysts issued misleading research reports.

New York state attorney general Eliot Spitzer went after Merrill over allegations the company's analysts publicly touted some stocks so the company could win lucrative investment banking business. But in private e-mails, Spitzer had said those same analysts were frequently critical of the stocks they were recommending.

Under the terms of the settlement, Merrill will separate the pay link between its research and investment banking divisions. Analysts will now be paid for only services aimed at the brokerage's individual clients.

Merrill Lynch settlement could be the first of many

A new committee will also be created to ensure that all research recommendations are objective. Electronic communications between the investment banking and research arms at Merrill will be monitored.

Merrill is not the only brokerage under examination by Spitzer's office. Evidence from at least six other brokerage houses has been subpoenaed.

In a morning news conference, Spitzer called the Merrill settlement a "template" for agreements with the other brokerages under investigation.

"Real reform is the key to restoring investor confidence," Spitzer said.

"This agreement changes the way Wall Street will operate, severing the compensation link between the research and banking divisions that tainted investment advice," he said.

Spitzer was reported to have been seeking an admission of guilt from Merrill, but the brokerage did not admit wrongdoing or liability.

The company did issue a statement of "contrition." It apologized to its clients, shareholders and employees "for the inappropriate communications brought to light by the New York State Attorney General's investigation," the company said in a release.

"We sincerely regret that there were instances in which certain of our Internet sector research analysts expressed views that at certain points may have appeared inconsistent with Merrill Lynch's published recommendations," the brokerage said.

Merrill will pay $48 million US to New York State and a $52 million US civil penalty to other states, provided they accept the settlement.

The fine is not compensation. Investors have filed dozens of class-action lawsuits seeking billions of dollars in damages.

Shares of Merrill Lynch closed up 47 cents at $43.85 US on the NYSE.