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Merrill Lynch settles with N.Y.

LEGAL NEWSLINE

Sunday, December 22, 2024

Merrill Lynch settles with N.Y.

Cuomo

NEW YORK (Legal Newsline) - Facing a possible lawsuit from New York Attorney General Andrew Cuomo, Merrill Lynch & Co. agreed Thursday to buy back the auction rate securities it had sold before the ARS market collapsed in February.

Merrill Lynch also settled with the Commonwealth of Massachusetts Thursday. Cuomo had threatened legal action if it didn't join the group of ARS sellers with which he has reached agreements.

"Today is a win for investors and a win for the market, and to date we've returned close to $50 billion of liquidity to over 183,000 investors across the nation," Cuomo said.

"At the heart of this investigation is improving confidence for the investor and for the market, and today we've taken another giant step forward towards fulfilling this goal."

The Goldman Sachs Group and Deutsche Bank joined in the agreement. Wachovia, Citigroup, JP Morgan Chase, Morgan Stanley and Swiss bank UBS had already reached agreements with Cuomo.

Auction rate securities are investments that have their interest rates periodically reset by auctions.

Merrill Lynch also has to pay a $125 million penalty, while Goldman Sachs will pay $22.5 million and Deutsche Bank $15 million.

Cuomo's agreements also require the companies to consent to a public arbitration procedure to resolve claims of consequential damages suffered by retail investors as a result of not being able to access their funds.

From Legal Newsline: Reach John O'Brien by e-mail at john@legalnewsline.com.

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