The US brokerage giant Merrill Lynch has agreed to disclose more information to investors.

The pledge - made to the New York attorney general - comes after the firm was accused of issuing biased stock research.

Merrill will now disclose a wide array of information about its investment banking activities when it covers a company in its reports.

The decision is likely to set new standards for the industry as a whole.

Merrill is the world's largest brokerage with $1.4 trillion in total client assets.

'Shocking betrayal

The firm was castigated publicly by New York State Attorney General Eliot Spitzer following a probe which said the brokerage's "supposedly independent and objective investment advice was tainted and biased by the desire to aid Merrill Lynch's investment banking business".

Mr Spitzer said Merrill Lynch's stock ratings contained "misleading information" which was "biased and distorted" because the bank had attempted to "secure and maintain lucrative contracts for investment banking services".

This "shocking betrayal of trust by one of Wall Street's most trusted names" had aided the brokerage's corporate clients but harmed individual investors, Spitzer said.

"Analysts at Merrill Lynch helped recruit new investment banking clients and were paid to do so.

"The public, however, was led to believe that research analysts were independent, and that the firm's rating system would assist them in making critical investment decisions," he said.

Angry rebuttal

Mr Spitzer's "conclusions are just plain wrong", Merrill Lynch said following the statement.

"We are outraged that we were not given the opportunity to contest these allegations in court," the brokerage said, insisting that it was "confident that a fair review of the facts will show that Merrill Lynch has conducted its research with independence and integrity".

The case began as an investigation into overly optimistic recommendations of internet shares made by Merrill Lynch analyst Henry Blodget who has since left the brokerage.

"The case must be a catalyst for reform throughout the entire industry," said Mr Spitzer, calling for more clear separations between financial houses' banking and research divisions.