You can bet Eliot Spitzer is not taking this well: Citigroup is mulling a move that would fold its once-maligned equity research unit into the institutional securities business. Recall that six years ago, in a high-profile victory for Spitzer, a so-called "global settlement" forced banks to separate the two and ended the practice of using analysts as tools of bankers. This may seem shocking. But the fact is that investment banking still pays for the research, the Financial Times notes. Citi execs tell the paper that rules separating the two functions will prevent any conflicts of interest. Which makes sense. But not all have great trust in Citi right now. It was just accused of destroying evidence in an auction rate security probe by the state of New York. Meanwhile, Mass. regulators accused Merrill Lynch execs of muzzling an analyst who was bearish on auction rate securities.  

For more:
- here's the Financial Times article 

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More on the big boys at Goldman Sachs and independent research