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Merrill Lynch: Four legs good, two legs bad

The professionals who left Wall Street firm Merrill Lynch last year compare it with George Orwell's Animal Farm. It's a pretty successful farm, and more human than most. But have the guys at the top pushed their teamwork ethos and those catchy slogans a little too far? Michelle Celarier reports


At Merrill Lynch, there was no doubt about it: Edson Mitchell was a star. Largely under his direction, the investment bank's fixed-income division leapt from nowhere in the 1980s to become the number one global player. Using swaps and derivatives talent hired from JP Morgan and Morgan Stanley, Merrill surprised its competitors by becoming one of the most creative and innovative players on Wall Street. By 1995, the charismatic Mitchell was said to be in command of a $1 billion revenue stream - the driving force behind Merrill's international expansion in recent years.

But last January, Merrill embarked on a strategic reorganization, and the future of Mitchell's star status seemed to be thrown into question. He was asked to head equities, a move his superiors said was designed to broaden his management capabilities. But outsiders interpreted the reassignment as a way of breaking down Mitchell's power base, as part of an attempt to rid Merrill of the fiefdoms they say had plagued it for years. After weeks of negotiations, Mitchell turned down the new assignment and defected in May to Deutsche Morgan Grenfell in London. He was the most senior person to leave Merrill in more than a decade.

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