The settlement averted the possibility that Eliot L. Spitzer, the attorney general of New York, would file criminal charges against Merrill or any of its analysts or managers. Citing e-mail messages written by Henry Blodget and other Internet stock analysts, Mr. Spitzer had accused Merrill of promoting stocks of companies whose investment banking business Merrill wanted.

Merrill still, however, faces civil lawsuits and complaints in arbitration by individual investors. Federal securities regulators are also investigating conflicts of interest among Wall Street analysts.

But some former Wall Street analysts and plaintiff lawyers said the deal would bring little real change because it would not end the fundamental conflict of having analysts try to serve two masters — the investors who follow their recommendations and the corporations that pay investment banking fees to their firms. Merrill's analysts, some of whom earn several million dollars a year, will continue to woo those corporations and try to help sell their stocks and bonds to mutual funds and other big investors. [News analysis, Page C1.]

"The analysts are still going to be, basically, high-paid salespeople," said Thom Brown, an analyst who formerly worked at a big investment bank and was interviewed last year by Mr. Spitzer's investigators. "The most important aspect of their work is not going to change. What is that? Bringing in investment banking business."

The $100 million penalty — all of which will go to the treasuries of New York and other states — would be one of the largest paid by a securities firm. It would match the amount Credit Suisse First Boston agreed in January to pay to federal securities regulators to settle investigations into its sales of new stocks in the late 1990's. Still, it amounts to less than a fifth of Merrill's earnings of $573 million last year and only a small fraction of the $3.78 billion Merrill earned in 2000.

"Clearly, the world is shifting," Mr. Spitzer said in an interview. "You have the largest investment house fundamentally rewriting the rules. You don't pay a $100 million fine if you didn't do anything wrong."

In the settlement Merrill executives apologized again for the behavior of their analysts but did not admit to any wrongdoing. Instead, they agreed to reorganize Merrill's research department and to stop allowing investment bankers to help determine how much analysts earn.

Merrill also agreed to prohibit analysts from promising positive stock ratings to prospective clients or from lowering their ratings to punish companies for not hiring Merrill.

Merrill executives said the firm had never paid its analysts a share of the fees from particular transactions they worked on. But their contributions to investment banking were measured and were considered in setting their pay.

Merrill will put more emphasis on how well the securities an analyst shepherds to market perform, said Rosemary Berkery, Merrill's general counsel. She said analysts would still help bankers identify and evaluate companies that Merrill could take public. Now, the performance of those new stocks, not just the fees earned from them, will affect the analysts' compensation, she said.

That system may open up another conflict, though, some critics said. Analysts may be motivated anew to recommend shares of companies to help improve their short-term performance on that score, they said.

David H. Komansky, Merrill's chairman and chief executive, said he did not expect any significant change in how much analysts earn because of the settlement.

Merrill's stock had sunk by more than $10 a share since Mr. Spitzer publicized his accusations. That decline reduced the company's stock market value by more than $9 billion. Although some analysts said the settlement had not hurt Merrill's prospects, its stock rose just 47 cents, or about 1 percent, yesterday to $43.85.

By settling, Mr. Spitzer was able to declare victory in a quest that brought him national attention as a reform-minded prosecutor as well as criticism for tackling an issue considered the province of federal regulators. Mr. Spitzer has repeatedly criticized the Securities and Exchange Commission for ignoring the problem of analysts' conflicts of interest while saying that he wanted to work in partnership with the commission.

"We commend the New York attorney general for shedding additional light on this critical issue and bringing this phase of the investigation to a speedy conclusion," Stephen M. Cutler, the commission's director of enforcement, said in a statement. "While this settlement is an important milestone for investor protection, it is not the finish line and will not preclude our own efforts on behalf of the investing public."

Mr. Spitzer said he hoped that the changes Merrill agreed to make would serve as a model for other Wall Street firms. But Merrill's competitors may take different tacks. A senior official of the Goldman Sachs Group said yesterday that he saw no problem with investment bankers' helping to evaluate the performance of analysts and did not endorse any limitation on the interaction between analysts and investment bankers.

"I don't see this issue fundamentally as one of separation," said E. Gerald Corrigan, a managing director of Goldman Sachs, whom the firm appointed yesterday to be an ombudsman for its research department. "Quite to the contrary. It seems to me that if analysts are to be effective, and effective means to be objective and independent, they cannot live in an ivory tower or an isolation booth." Mr. Corrigan is a former chief executive of the Federal Reserve Bank of New York.

Mr. Spitzer said his office would continue to investigate the behavior of analysts at several other big firms. He said some of those firms had begun to deliver documents he had requested under subpoenas.

Mr. Brown said Mr. Spitzer had to punish Merrill's analysts and executives if he wanted to deter fraudulent behavior. Analysts at other firms who have recommended stocks in hopes of being paid for helping their firms win underwriting assignments "breathed a sigh of relief today," Mr. Brown said.

Although the settlement did not involve penalties for any current or former employees, Mr. Spitzer said that he expected the analysts would "have their day in court."

Reporters seized on them as evidence of what many investors had long suspected: that Wall Street analysts often contort themselves to come up with reasons to recommend buying stocks. The involvement of Mr. Blodget, who had been Merrill's best-known analyst before he quit in November, was fuel for the bonfire of Merrill's public image.

Mr. Komansky himself said that he "found it quite embarrassing" when he read a newspaper article about the accusation, which Mr. Spitzer first made publicly on April 8. He told employees that the firm's reputation had been tarnished and he apologized at a shareholder meeting last month.

Mr. Blodget, who earned $12 million in 2000, has declined to discuss the matter.

Yesterday, Merrill apologized again "for the inappropriate communications brought to light." It added, "We sincerely regret that there were instances in which certain of our Internet sector analysts expressed views that at certain points may have appeared inconsistent with Merrill Lynch's published recommendations."

Mr. Komansky said Merrill would now begin an aggressive campaign to repair the damage, beginning with newspaper ads today proclaiming that Merrill's revised policies would set a new standard for research.

Throughout the day, Mr. Komansky and E. Stanley O'Neal, Merrill's president, told employees, investors and reporters that the settlement did not involve an admission of wrongdoing. Asked by an employee why the firm was paying the states, Mr. O'Neal said that the firm wanted to put the issue behind it.

The $100 million will be divided among the states, the District of Columbia and Puerto Rico, with New York receiving $48 million and the others sharing the rest, Mr. Spitzer said. New York's share will go into the state treasury for general purposes, he said.

But Merrill will not pay anything until the other parties accept the terms of the agreement. The National American Securities Administrators Association has endorsed the agreement, and Mr. Spitzer has assured Merrill's executives that he will persuade the states to accept it.

Several plaintiffs' lawyers who represent Merrill customers complained that Mr. Spitzer had obtained neither restitution for individual investors nor an admission of liability that would help them in court.

"This agreement has done nothing to help investors on an individual basis in arbitration or in litigation, other than to put the e-mails in the public domain," said John Lawrence Allen, a lawyer in Manhattan. "It's a great political ploy for Mr. Spitzer."

Mr. Spitzer, who is scheduled to be nominated for re-election this week at the state Democratic Party's convention in Manhattan, countered that he had given investors a big leg up in court against Merrill.

"We have done more to air and establish the record of what went on on Wall Street than has any previous investigation," he said.