Massachusetts Secretary of State
Files Suit Against Merrill Lynch & Co. for Securities Fraud
Secretary of State, William Galvin, has filed suit against
Merrill Lynch & Co., the third-largest U.S. Securities
firm, accusing Merrill of misleading investors about the
stability of the auction-rate market at the same time the
investment bank was marketing the securities. According
to a statement today from Secretary of State Galvin, Merrill “co-opted” its
research department to help place the securities. Galvin
explained that Merrill “was aggressively selling” the
securities “to investors and its auction desk was censoring
the research analysts to make sure they downplayed” market
risks. “[Merrill] knew the auction markets were in
trouble, but the investors were the last to know.”
Merrill is the second bank sued by Galvin after Wall Street
brokers abandoned their routine role as buyers of last resort
for auction-rate securities in mid-February, allowing the
$330 billion market to collapse. Massachusetts last month
filed a complaint against UBS AG, Switzerland’s biggest
bank. A related investigation of Bank of America Corp.
is ongoing. |
