Compliance December 31, 2008

Merrill Settles Discrimination Lawsuit

Merrill Lynch&Co. Inc. agreed Tuesday to pay $1.55 million to settle a lawsuit claiming discrimination in the firing of an analyst because he was an Iranian Muslim, Reuters reported.
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As part of the settlement with the U.S. Equal Employment Opportunity Commission (EEOC), Merrill Lynch also agreed to train its employees regarding bias based on religion and national origin, and not retaliate against workers who oppose discrimination.

The settlement resolved allegations that Merrill refused to promote and then in August 2005 fired quantitative analyst Majid Borumund because of his religion and national origin, according to the news report. Meanwhile, Merrill allegedly retained and promoted a less qualified person.

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Merrill denied the charges in the EEOC’s June 2007 lawsuit filed with U.S. district court in Manhattan.

“All individuals deserve the freedom to compete on a fair and level playing field, which did not occur in this case,” said Spencer Lewis, New York district director of the EEOC, in a statement.

According to court papers cited by Reuters, Merrill will pay Borumand $713,333 in back pay, $356,667 in compensatory damages, and $480,000 for legal fees.

The EEOC will also monitor Merrill’s compliance with the settlement, which remains in effect for two years, according to court papers.

Merrill Lynch is being acquired by Bank of America Corp.—a deal expected to close soon (see “Merrill Lynch Stockholders Approve BoA Deal’).

The Markets December 31, 2008

Credit Crisis Cuts into Bond Sales

U.S. bond sales and asset-backed securities issuance were down sharply in 2008 amid the global credit crisis.
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U.S. investment-grade bond sales fell to $645 billion from $986.8 billion in 2007, according to Thomson Reuters data, and U.S. junk bond sales fell to $37.2 billion in 2008 from $135.6 billion in 2007.

J.P. Morgan Chase & Co. was the lead bookrunner for high-grade sales in 2008, followed by Citigroup, the data showed, according to Reuters. JPMorgan Chase also was lead bookrunner in junk bond sales, followed by Banc of America.

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Meanwhile U.S. asset-backed securities issuance tumbled by 82% to $159.8 billion this year compared with a robust $898 billion sold in 2007, according to Thomson Reuters. In the final quarter of the year, ABS supply totaled a mere $3.6 billion, compared with $106.3 billion in the prior year, as liquidity dried up and issuer financing costs soared, according to the report.

JPMorgan Securities was the top ABS underwriter in 2008 with 67 deals totaling $31.1 billion.

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