New York Attorney General Andrew Cuomo said on Friday he had sent a letter to Merrill Lynch & Co notifying the investment bank that his office would file suit against it imminently as part of an investigation into the collapse of the auction-rate securities market.
“We have been trying to resolve the matter,” with Merrill, Cuomo said during a conference call with reporters. He said he has not been able to reach a satisfactory agreement with the bank.
The letter sent to Merrill, which was given to reporters by Cuomo’s office, was similar to one Citigroup Inc received before settling with the attorney general. Cuomo is one of several regulators investigating whether financial companies misled investors in the auction-rate securities market. Officials from several other states and the Securities and Exchange Commission have also been involved in negotiations with the big banks.
Merrill said in a statement it was surprised to receive a letter about potential legal action, noting it has held discussions with regulators since it announced a voluntary repurchase plan.
“We anticipated further talks,” Merrill said in the statement.
The expected lawsuit comes a week after Merrill said it would voluntarily repurchase auction-rate securities from customers.
Merrill said it would buy back securities between Jan. 15 and Jan. 15, 2010. The bank said the repurchase plan would likely affect 30,000 clients holdings about US$10 billion in the securities.
The attorney general’s office called the bank’s voluntary buyback plan “woefully inadequate,” the letter sent to Merrill said. The letter said the attorney general is still open to reaching a settlement with Merrill, assuming the bank meets similar provisions agreed upon by other banks reaching settlements.
Cuomo said his office is investigating about 25 financial firms that were involved in selling the securities. The investigation includes Goldman Sachs Group Inc and other underwriters of the securities as well as retail brokers, Cuomo said.
“We’ve had discussions with them,” Cuomo said of Goldman Sachs.
Cuomo’s office has targeted the financial firms with the largest portfolios of auction-rate securities because settlements with those companies will affect the most customers.
Earlier on Friday, Wachovia Corp became the fifth bank to settle as part of the investigation; Wachovia agreed to buy back US$8.5 billion of the securities at face value from investors.
The Charlotte, North Carolina-based bank would also pay US$50 million in fines to be distributed among states. The fines will be distributed to states based on the amount of securities sold to investors in each state.
Over the past eight days, Citigroup, UBS AG, JPMorgan Chase & Co and Morgan Stanley agreed to repurchase a combined US$32.6 billion in auction-rate securities and will pay fines totaling US$310 million.
Nearly 150,000 customers have been affected by the five settlements.
The auction-rate securities market involved investors buying and selling instruments that resembled corporate debt, except the interest rates were reset at regular auctions, some as frequently as once a week.
A number of companies and retail clients invested in the securities because they could treat their holdings almost like cash.
The bond-like investments were widely held by many institutional and individual investors and were seen as highly liquid, money market-like investments.
However the market for them collapsed in February amid the downturn in the broader credit markets.
Regulators have been investigating the collapse in the market to determine who was responsible for its demise and whether banks knowingly misrepresented the safety of the securities when selling them to investors.
Like the other banks that have reached agreements with regulators, Wachovia will buy back all auction-rate securities from retail customers, charities and small businesses.
It will buy back those securities by Nov. 28. Wachovia will also reimburse customers who sold securities at a loss after the market collapsed in February.
Wachovia will also repurchase securities from institutional shareholders by the end of June. Wachovia neither acknowledged or denied any wrongdoing as part of the settlement.
These settlements come amid a time when banks have reported billions of dollars in losses from other investments because of deterioration in credit markets.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day