Auction Rate Securities Fraud Lawyer

The Massachusetts Complaint against Merrill Lynch

By now nearly everyone has heard about the lawsuits being filed against banks selling auction rate securities, such as Merrill Lynch. People may not be clear, however, on the exact charges being made or the penalties being sought. This article will examine the complaint filed by the Securities Division of the Commonwealth of Massachusetts against Merrill Lynch in greater detail, so readers can gain a more in-depth understanding of the auction rate securities market collapse.

One charge being filed against Merrill Lynch is related to the research conducted and published by the firm. Merrill Lynch has a Research Department which is supposed to be independent from the rest of the corporation. Its purpose is to report unbiased information on the ups and downs of the market. Instead, the Sales and Trading Department of Merrill Lynch was allegedly allowed to pressure the Research Department into publishing favorable reports about the auction rate securities market. Sales and Trading allegedly had the authority to reject a report and demand a new one if the tone was not positive enough for their tastes.

The company is also being charged with misleading clients directly when selling them securities. The higher management was allegedly fully aware of the impending market collapse several months before it occurred. As early as November 17, 2007, one executive is accused of emailing another to discuss the troubled nature of the market. In order to rid themselves of these risky investments, the managers supposedly lied to their brokers as well as their clients, encouraging them to buy and sell securities that they knew to be highly unstable.

If the Commonwealth wins this case, Merrill Lynch will pay a fine to the government, buy back all securities sold under misleading circumstances and possibly face other penalties to be determined. If you would like to read the complaint for yourself, you can find it at www.sec.state.ma.us/sct/.

If you have lost money in the auction rate securities market due to the deceptive tactics of an investment bank, contact our auction rate securities attorneys at 800.220.9341.