NEW YORK -- On Wall Street these days, just the appearance of conflicts of interest can botch a good deal. Just ask the New York Stock Exchange.

Goldman Sachs Group Inc.'s heavy-handed role in brokering the NYSE's acquisition this month of electronic trading company Archipelago Holdings Inc. is causing an outcry in the financial world and raising questions of how the investment firm was ever allowed to get its fingerprints on just about every corner of this deal.

On top of that, even those who are trying to derail the merger have their own riddled past with the exchange.

With conflicts seemingly all around, it puts the deal as it stands in jeopardy and casts a shadow on the real news -- that the NYSE is poised to make its biggest changes in its nearly 213-year history.

This deal would turn the NYSE into a for-profit public company that will be known as The NYSE Group Inc. It would give the NYSE a fast electronic trading option that it could pair with its floor-trading operation, which some speculate it could eventually phase out over time. And the merger would put the NYSE in a better position to compete with its chief U.S. rival, the Nasdaq Stock Market Inc., and tackle increasing global competition.

Goldman and the NYSE's boss John Thain should be credited with putting together a winning combination. The trouble, though, comes in the way the deal was done.

For one, Goldman played too big a role by advising both sides in this merger, something that raises questions over whether either side got the best deal they could. In fact, according to data from Thomson Financial, an adviser has worked for both sides in 500, or less than 1 percent, of the 145,000 deals done since 1982.

"It is hard to negotiate with yourself and that is exactly what happened with this deal," said Charles Elson, director of the Weinberg Center for Corporate Governance at University of Delaware. "That has to create lots of questions about this merger."

Goldman also stands to profit big from its interests in the merging companies. It owns 15.6 percent of Archipelago, which it took it public last year. Goldman also owns about 21 of the 1,366 seats on the NYSE, and one of its divisions, Spear, Leeds & Kellogg, is a major specialist firm on the NYSE's trading floor.

And this tangled web of Goldman connections even extends to Thain, who was formerly a Goldman executive and holds millions of dollars of the firm's shares. He should have known better than to let Goldman take such a staring role.

"Inquiring minds want to know how John Thain ... can buy an electronic communications network partially owned by Goldman Sachs without anyone screaming 'conflicts of interest'," said Jeffrey D. Saut, chief investment officer at Raymond James & Associates Inc.

Yet the NYSE is defending the merger agreement by deeming it a "fair proposal that is in the very best interest of the NYSE, our members and the competitive position of U.S. financial markets." It also noted in a statement Monday that the fairness of the deal was independently confirmed by a second investment bank, Lazard Freres.

Goldman is also standing by its role, and Archipelago released a letter this week that it received from Goldman on April 15 saying the company acknowledged it was aware of the "potential conflicts of interest, or a perception thereof" before the deal went through. Archipelago, which included the letter as part of a regulatory filing on Tuesday, used investment bank Greenhill & Co to review the fairness of the deal.

Still, that isn't doing much to temper the criticism of the proposed merger, and what's ironic is who is screaming foul the loudest -- none other than former NYSE director Kenneth Langone, who has in the past been accused of his own share of conflicts of interest.

That stems from his close relationship with former NYSE chairman Dick Grasso and his role as chairman of the NYSE's compensation committee from 1999 to 2003 when Grasso was awarded a $187.5 million pay package. New York Attorney General Eliot Spitzer sued Grasso and Langone last year claiming they misled the NYSE board of directors about Grasso's pay package and, in some cases, bullied board members into approving it.

Now Langone is teaming up with a group of NYSE seat holders as well as some Wall Street executives to quash the Archipelago deal and come up with their own buyout offer for the exchange. Given his past tangles with the NYSE, his intentions have been called into question.

No wonder all this dealmaking is the buzz on Wall Street right now. After the stock research and trading scandals of the recent past, conflicts of interest, or even the perception that there could be a conflict, were supposed to be avoided.

So much for that holding true.