Skip to main content

Cuomo and Merrill Lynch Still At Odds Over Auction Rate Securities

  • Author:
  • Updated:

Merrill Lynch faces an "imminent" lawsuit from New York State Attorney General Andrew Cuomo. The attorney general said that his office has "not been able to reach satisfactory terms" with Merrill, which earlier this week offered to buy back some auction rate securities from retail investors.
We're told that the sticking points are Merrill's plans to delay the purchases until next year, Merrill's resistance to reimbursing customers who sold the auction rate securities at a discount and whether or not Merrill should expand the deal to include pension funds.
Perhaps most troubling for Merrill is that Cuomo may sue particular individuals involved in the market for auction rate securities. The other day he said he was not just following the money, but following "the people." Within Merrill Lynch there is a lot of trepidation that the Attorney General could bring lawsuits, and perhaps even criminal charges, against brokers who sold auction rate securities and bankers involved in underwriting.