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Merrill Lynch may have misrepresented the liquidity of Auction Rate Securities.
Investigation Source (Case #08-cv-03037)
- Nationwide
Investigation Scope
Category Information
Investigation Topics
- Investments
- Unsuitable Investments
Product or Service
- Auction Rate Securities
Injury Type
- Monetary Loss
Investigation Details
Investigation and pending class action against Merrill Lynch on behalf of investors who purchased auction rate securities from Merrill Lynch.
Auction rate securities are also known as auction rate preferred stock; auction market preferred stock; variable rate preferred securities; money market preferred securities; auction rate bonds.
Merrill Lynch represented to investors that auction rate securities were equivalent to cash or money market funds, were highly liquid and safe investments for short term investments. Royal Bank of Canada knew but failed to disclose material facts about auction rate securities including the fact that auction rate securities were in fact long-term financial instruments that were artificially supported and manipulated by broker-dealers thereby creating the appearance of liquidity and stability.
On February 13, 2008, 87% of all auction for auction rate securities failed. This collapse left investors holding 300 billion in auction rate securities with no means of liquidating the investments.
Auction rate securities are also known as auction rate preferred stock; auction market preferred stock; variable rate preferred securities; money market preferred securities; auction rate bonds.
Merrill Lynch represented to investors that auction rate securities were equivalent to cash or money market funds, were highly liquid and safe investments for short term investments. Royal Bank of Canada knew but failed to disclose material facts about auction rate securities including the fact that auction rate securities were in fact long-term financial instruments that were artificially supported and manipulated by broker-dealers thereby creating the appearance of liquidity and stability.
On February 13, 2008, 87% of all auction for auction rate securities failed. This collapse left investors holding 300 billion in auction rate securities with no means of liquidating the investments.
Defendant Details
| Name (Stock Symbol) | Brief Description |
|---|---|
| Merrill Lynch & Co. Inc. | Merrill Lynch & Co. Inc., a subsidiary of Bank of America Corporation, provides a range of financial services, including asset management, investment banking, and investment advisory services. |