Merrill Lynch: Lessons in Stampeding the Media Herd

Felix Salmon sniffed it first and loudest, and Jack Flack then hung it on a clothes-line. But only Punk Ziegel analyst Dick Bove used it to provide a full-fledged tutorial in the dark arts of Wall Street vengeance.

The "it" was the strategic leak carried by the NYT, hollering that the Merrill board was hopping mad about Stan O'Neal treasonous inquiry of Wachovia's Ken Thompson -- "Would you be interested in having a conversation?"

Jack Flack's eyebrows arched when Joe Kernen and Charlie Gasparino quizzed Bove on Monday morning's Squawk Box about the Punk Ziegel report on the leak.

The clip is worth watching, if nothing else to see Gasparino's amusement about the leak, and to hear Bove's rationale on why the fuss over the Wachovia conversation didn't make any sense. But here's the text from the report, which Bove issued Friday.

"The article in the New York Times, a publication I respect, was a 'hatchet job.' Stan O'Neal is clearly on the ropes. There is also just as clearly a faction in and out of the company who want him replaced. If one reads Patricia Beard's book Blue Blood & Mutiny: the Fight for the Soul of Morgan Stanley, one can get an idea as to how one unseats a CEO.

"The process is to gather as much inside information as possible that can be spun to negative and then feed the press with that informtion. This is done by setting up a team who on a daily basis has no other goal but to get rid of the CEO in favor of someone they think they can support.

"This is what now seems to be happening at Merrill. The Times story contains elements of truth. I assume, in that Stan O'neal has talked to Ken Thompson. Perhaps, they even discussed looking at how the two companies would fit together. But the person who fed the story to the Times argued that this conversation was a firing offense. It was in the purview of what Stan O'Neal is supposed to do."

Jack Flack just dropped Beard's book into his Amazon cart.