State accuses Merrill Lynch of selling auction rate securities

[0:00] ..." We're talking to secretary of the commonwealth of bill Galvin. A -- charges leveled against Merrill Lynch. With the fraud and these auction rate securities sales first of -- tell me what is your office alleging here in this"...

[0:13] ..." alleging. Merrill Lynch engaged in fraudulent and unethical conduct specifically deliberately selling these auction rate securities to. Unsuspecting investors and Massachusetts 165. Buyers. Who were told that they would have liquidity that is that the month they would they would get their money"...

[1:24] ..." they get this straight here and that is your alleging. That the Merrill Lynch -- they're selling these. These auction rate securities then convinced their research department to actually re write a report such right describing"...

[1:54] ..." dot com bubble where there was the same type of behavior. A Wall Street pledged they were going to do it again and that they also declined and we have another example. This whole area of auction rate securities which may seem arcane too many business. Has affected many individuals here in Massachusetts -- 160 are bars in the Merrill case we believe 95 million dollars of these instruments. Was sold between the first of January the twelfth of February of this year. Many of these people stock. And it's hurting our economy it's -- these individuals it's very small businesses. Where is seeking Merrill Lynch is to make these people hold to make good. On these instruments to dip in the -- value of their money. And we feel of the unethical conduct on the bottom Merrill Lynch and in particular the effort to. Co -- research analysis is despicable and on trust it in this untrustworthy behaviors something that we we have to secretly people. Now that this occurred here in Massachusetts only. You know it's a nationwide problem I mean there is a problem nationwide not just with this firm but with a number of firms this is the second complaint that we have brought here in Massachusetts. Massachusetts. Has been aggressive in pursuing misspoke we're not alone other states also brought actions as well. The SEC has been remarkably quiet. But our concern has to make our investors here in Massachusetts -- To make sure that we do our best to get news these people treated fairly which in our view which rescission"...

[3:46] ..." complaining about our complaint. But that the problem is much greater than Massachusetts it's something really requires some sort of national approach. But the states are once again leading the way in showing that would"...

[0:00]" We're talking to secretary of the commonwealth of bill Galvin. A -- charges leveled against Merrill Lynch. With the fraud and these auction rate securities sales first of -- tell me what is your office alleging here in this case."

[0:13]" alleging. Merrill Lynch engaged in fraudulent and unethical conduct specifically deliberately selling these auction rate securities to. Unsuspecting investors and Massachusetts 165. Buyers. Who were told that they would have liquidity that is that the month they would they would get their money out quickly. When Merrill new indeed that the market was collapsing they do in fact. They were trying to unload this inventory off their own books. To put it on the back of unsuspecting investors. Which is left many of these individuals and there are many instances are individual citizens and small businesses not just institutions. Have left them unable to access the full value of their money. And what we privately troubling look at Merrill case from the deliberate misleading investors. Is that there was we believe and we election not play. An effort to corrupt the analysis that is the research analysis prepared by another Merrill exposed to be Independent. To make that seems as if they would not at risk where important fact even their own research analysis. Had reason to believe -- did believe. That there were they would not the investment they're being portrayed as."

[1:24]" Secretary -- they get this straight here and that is your alleging. That the Merrill Lynch -- they're selling these. These auction rate securities then convinced their research department to actually re write a report such right describing this investment instrument."

[1:39]" We are alleging that there was an effort to co -- The research now systematic more favorable than impact it would have otherwise spent. And and that's particularly troublesome because just a few years ago. We saw this entire experience. Previously. India dot com bubble where there was the same type of behavior. A Wall Street pledged they were going to do it again and that they also declined and we have another example. This whole area of auction rate securities which may seem arcane too many business. Has affected many individuals here in Massachusetts -- 160 are bars in the Merrill case we believe 95 million dollars of these instruments. Was sold between the first of January the twelfth of February of this year. Many of these people stock. And it's hurting our economy it's -- these individuals it's very small businesses. Where is seeking Merrill Lynch is to make these people hold to make good. On these instruments to dip in the -- value of their money. And we feel of the unethical conduct on the bottom Merrill Lynch and in particular the effort to. Co -- research analysis is despicable and on trust it in this untrustworthy behaviors something that we we have to secretly people. Now that this occurred here in Massachusetts only. You know it's a nationwide problem I mean there is a problem nationwide not just with this firm but with a number of firms this is the second complaint that we have brought here in Massachusetts. Massachusetts. Has been aggressive in pursuing misspoke we're not alone other states also brought actions as well. The SEC has been remarkably quiet. But our concern has to make our investors here in Massachusetts -- To make sure that we do our best to get news these people treated fairly which in our view which rescission of these bad contract those -- welcome. And making those that have got to sell -- lost -- And most of these investments private investors or cities as well note -- Willard is a mixture but I think global looked oftentimes that many people think he's just institutional investors or municipalities. But there are individuals who. Purchased these were marketed to them as liquid and expand allowing them money to be accessible would take a -- are higher rate. And that's the deception were complaining about our complaint. But that the problem is much greater than Massachusetts it's something really requires some sort of national approach. But the states are once again leading the way in showing that would protect our citizens try to. I haven't treated fairly which they have not been by the financial services industry in general in this area."