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Compliance September 3, 2009
Merrill Hit with ARS Fine from Florida
Merrill Lynch will pay Florida $8.5 million to settle allegations over the sale of auction-rate securities (ARS).
Reported by Ellie Behling
The Florida Office of Financial Regulation said Merrill brokers misled investors into believing ARS were safe. ARS came back to haunt Merrill (now owned by Bank of America) and many other financial firms when the securities went illiquid in February 2008.
The settlement represents Florida’s slice of a $125 million national settlement orchestrated by the North American Securities Administrators Association (NASAA) and multi-state effort led by Massachusetts (see “Massachusetts Charges Merrill with Fraud over ARS Sales”).
The Merrill negotiations also resulted in “a substantial amount of investors’ funds” being returned to investors who bought ARS, the Florida regulator said. Many other financial firms, including Merrill, have been asked to buy back the illiquid investments (see “California Settles with BofA over ARS”).