Skip to main content

Mysterious Mistakes At Merrill

  • Author:
  • Updated:

In a filing with the Securities and Exchange Commission on Monday, Merrill Lynch said its cash flow statements for 2005, 2006 and the first three quarters of 2007 were wrong. The statements overstated cash provided by derivatives financing transactions. But, lucky for them, they made another mistake, overstating cash used for trading liabilities. So no big deal, right? Take a little from here, add a little there. It offsets.
Except that we have no idea what this means. What exactly did Merrill get wrong? The actual filing is extremely vague about these errors and it would be helpful to know how and why these were made. It's hard to be confident that Merrill understands its exposure to various derivatives if it only discloses non-specific errors and provides no detail. Anyone care to venture a guess what Merrill's mistakes were?
Merrill 8-K []