Merrill Lynch to Pay N.J. $4.87 Million to Settle Auction Rate Securities Investigation

NJTODAY.NET's online business directory

NEWARK – Merill Lynch will pay the state $4.87 million to settle an investigation into how the financial firm marketed risky investments, New Jersey officials announced today. The company also agreed to repurchase auction-rate securities (ARS) from private investors.

“This settlement with the Bureau of Securities holds Merrill Lynch accountable for how it marketed auction rate securities without fully revealing the risks to investors,” Attorney General Paula T. Dow said.

[smartads]

Although often marketed and sold to investors as safe, liquid, and cash-like investments, ARS are actually long-term investments subject to a complex auction process that failed in early 2008, resulting in illiquidity and lower interest rates than investors were promised.

“State regulators banded together, combined their resources and worked to hold investors harmless in the wake of this ARS crisis,” Acting Consumer Affairs Director Sharon Joyce said. “The New Jersey Bureau of Securities continues its vital work to safeguard the hard-earned monies of investors during these difficult financial times.”

“The myriad of investments available to consumers can be confusing and those offering products are obligated to fully disclose all relevant terms and conditions to potential investors,” Bureau of Securities Chief Marc B. Minor. “We will continue to act at the direction of the Attorney General to protect investors when our state securities laws and regulations are violated.”

The consent order requires Merrill Lynch to pay $4,871,620 in civil penalties to the Bureau. The fine amount represents the state’s pro-rata share of a settlement negotiated by a multi-state task force of state regulators formed by the North American Securities Administrators Association (NASAA).

The investigation into Merrill Lynch’s role in the marketing of auction rate securities is part of a larger state-led effort to address problems in connection with ARS investments. Early in 2008, state offices began receiving complaints from investors throughout the country.

As a result, 12 states, including New Jersey, formed a task force to investigate whether the nation’s Wall Street firms had systematically misled investors when placing them in auction rate securities.

NEWARK – Merill Lynch will pay the state $4.87 million to settle an investigation into how the financial firm marketed risky investments, New Jersey officials announced today. The company also agreed to repurchase auction-rate securities (ARS) from private investors.

Connect with NJTODAY.NET


Join NJTODAY.NET's free Email List to receive occasional updates delivered right to your email address!
Email ads@njtoday.net for advertising information Send stuff to NJTODAY.NET Like Us On Facebook Follow Us On Twitter Download this week's issue of NJTODAY.NET

Leave a Reply