Massachusetts Sues Merrill Lynch Over Inappropriate CDO Sales To Municipalities
On Saturday, February 2, 2008, Craig Karmin of The Wall Street Journal reported that “Massachusetts state authorities accused Merrill Lynch & Co. on Friday of fraud and misrepresentation” related to Merrill’s sale of collateralized debt obligations also known as CDOs.
The complaint filed by Massachusetts arose out of Merrill’s sale of $13.9 million of CDOs to Springfield, Massachusetts last spring. Within several months, these CDOs plummeted over 90% in value to $1.2 millions creating a financial dilemma for the municipality. Massachusetts complained that Merrill’s actions were “inappropriate and illegal” because “these highly-risky and esoteric CDOs were unsuitable ... and Merrill Lynch did not properly disclose to the City the risks of owning these CDOs.”
Meanwhile, Massachusetts is continuing its investigation into other CDO sales which Merrill made within the state and may also take additional action depending on the results of that investigation.
Page Perry, LLC is an eight lawyer Atlanta-based firm with over 125 years of collective experience representing investors in securities related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. Page Perry’s attorneys are actively involved in counseling municipalities and other institutional investors regarding their subprime investment problems.
