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Merrill Lynch faces fraud charges

USA TODAY, August, 2008 by Greg Farrell

The top securities regulator in Massachusetts charged Merrill Lynch with fraud Thursday, claiming the brokerage giant knowingly misled investors in the auction-rate securities market, which ground to an unexpected halt in February.

The action is the latest evidence that state and federal regulators are aggressively probing the breakdown in the market for auction-rate securities (ARS), an obscure corner of the financial world where $330 billion in interest-bearing bonds had historically been traded with ease.

The U.S. Attorney's office in Brooklyn, N.Y., has launched an investigation into the sale of auction-rate securities at Credit Suisse, and New York Attorney General Andrew Cuomo filed charges last week accusing Swiss bank UBS of fraud in that market. William Galvin, the Massachusetts secretary of state, filed similar charges against UBS in June.

In this latest action, Galvin accused Merrill brokers of assuring investors that any cash put ...

 

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