Merrill Lynch Repays Springfield
Last week, the Attorney General’s Office announced that investment bank and financial services firm Merrill Lynch will make a $300,000 payment to the Commonwealth related to its sales of auction rate securities to the city of Springfield. The payment stems from an investigation conducted by the Attorney General’s Office regarding whether Merrill representatives misled the city into investing in funds the company should have known were impermissible under Massachusetts state law.
In January 2008, after discussions with the Attorney General’s Office, Merrill repaid Springfield the amounts it had invested, which totaled nearly $14 million. The $300,000 payment includes $225,000 for fees and investigative costs, as well as $75,000 to educate and train town treasurers and other municipal financial officials on investment management practices and to review Massachusetts entities’ investments to determine their appropriateness. In the past month, the Attorney General’s Office conducted a series of 4 regional meetings with municipalities throughout the Commonwealth designed to provide information and resources to support careful decision-making and identification of scenarios that might create significant risk.
This week’s payment follows earlier recoveries by the Attorney General’s Office in the auction rate securities arena. In 2008, the Attorney General recovered more than $75 Million from UBS , Merrill Lynch, Citigroup and Morgan Stanley for Massachusetts governmental entities.