New York Attorney General Andrew Cuomo says he will send a letter to Merrill Lynch & Co. notifying the investment bank it will commence a legal action against it as part of wide-ranging investigation into the collapse of the auction-rate securities market.
Cuomo announced his plans in a conference call with reporters Friday morning.
Five banks have already settled with the attorney general's office and other state regulators, including UBS AG, Citigroup Inc., Morgan Stanley, JPMorgan Chase & Co. and Wachovia Corp. The banks agreed to buy the securities back from investors.
Auction-rate securities are investments that resembled corporate debt, except the interest rates were reset at regular auctions.
The market for the securities collapsed in February amid deterioration in the broader credit markets.
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