The Massachusetts Secretary of the Commonwealth charged Merrill Lynch & Co. with fraud in pushing the sale of auction-rate securities while "mis-statingthe stability of the auction market itself."
"This company was aggressively selling ARS to investors and its auctiondesk was censoring the research analysts to make sure they downplayed ARS market risks in research reports up to the day Merrill pulled theplug on its auctions," Secretary William Galvin said. "They knew the auction markets were in trouble, but the investors were the last toknow." The complaint also alleges Merrill co-opted its research department to help sell the securities and seeks to order the brokerage to "make good"on the sales of now-frozen securities and make restitution to investorswho sold at less than par.
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