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In the largest merger of last year, J.P. Morgan acquired Bank One. Morgan assured its investors that it had not paid too much, telling them that it was sure the price was fair because it had sought an opinion from one of "the top five financial advisors in the world."

The investors might have been just a tad dubious about the objectivity of the "top financial advisor" if they had known what Ann David and Marsha Longley of The Wall Street Journal later discovered: The advisor was J.P. Morgan itself. The two reporters also found out that Bank One's CEO, Jamie Dimon, had actually offered to sell his company for several billion less on condition that he be named head of the merged entity. Perhaps Morgan's shareholders would have preferred the combination of Dimon and the lower price. But Morgan's CEO, William Harrison, decided to spare them the knowledge that might endanger his own job. He had his minions describe the higher price as fair and did not bother to disclose the lower offer.

Is this case unusual? Not according to the Journal's reporters, who say that "it is an open secret on Wall Street that bankers' opinions are anything but arms-length."

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