Merrill Lynch Settles Up Broker Agrees to Bond Buyback

By FRANK QUARATIELLO

Merrill Lynch & Co. made amends with investors in auction-rate securities yesterday, agreeing to buy back billions in bonds as part of a lawsuit settlement with Massachusetts.

The Wall Street bank reached a deal with Secretary of State William Galvin’s office to redeem, starting Oct. 15, all illiquid auction-rate securities from retail customers who have less than $3 million on deposit. Starting Jan. 15, Merrill will buy back bonds from customers with accounts of $100 million or less.

“The settlement will provide thousands of Merrill Lynch clients with access to billions of dollars in funds that have been frozen” in the auction-rate securities market, said a statement from Galvin.

Merrill Lynch agreed to buy back up to $12 billion in the securities and pay fines of $125 million.

“We are pleased our clients have the certainty of a favorable resolution to this unprecedented liquidity crisis,” said John Thain, Merrill Lynch’s chief executive, in a statement.

Also yesterday, Goldman Sachs Group Inc. agreed to reimburse $1.5 billion of the securities and fork over a $22.5 million fine, while Deutsche Bank AG agreed to buy back $1 billion of debt and pay a $15 million penalty.

“It’s been a great day of progress,” said New York Attorney General Andrew Cuomo, who announced the agreements.

Originally published by By FRANK QUARATIELLO.

(c) 2008 Boston Herald. Provided by ProQuest LLC. All rights Reserved.