Securities Law Blog

Merrill Lynch & Co. said it will offer to buy back about $10 billion in auction-rate securities from retail clients after Citigroup Inc. agreed to take similar steps under a settlement with U.S. and state regulators. Merrill will pay face value for the securities, according to a statement today from the New York-based firm. The buybacks will begin in January and continue for a year. The investments have been frozen in customer accounts since Wall Street firms backed away from the market in February, leading to claims by customers and investigations by the U.S. Securities and Exchange Commission and regulators in New York and Massachusetts. "Our clients have been caught in an unprecedented liquidity crisis," Chief Executive Officer John Thain said in the statement. "We are solving it by giving them the option of selling their positions to us." Regulators in Massachusetts filed a civil complaint against Merrill last week, claiming the firm and its analysts pitched the securities to investors as the market was collapsing. Merrill extended its offer to individual investors, charities and small businesses. The firm said it doesn't expect purchases during the buyback period to have "a materially adverse impact on its capital ratios, liquidity or consolidated financial performance."

For more information on this subject contact securities attorneys, Michaels, Ward & Rabinovitz, LLP.