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Merrill Lynch, Pierce, Fenner & Smith Incorporated, doing business as Merrill, and previously branded Merrill Lynch, is an American
investment management Investment management (sometimes referred to more generally as financial asset management) is the professional asset management of various Security (finance), securities, including shareholdings, Bond (finance), bonds, and other assets, such as r ...
and
wealth management Wealth management (WM) or wealth management advisory (WMA) is an investment advisory service that provides financial management and wealth advisory services to a wide array of clients ranging from affluent to high-net-worth (HNW) and ultra-hi ...
division of
Bank of America The Bank of America Corporation (Bank of America) (often abbreviated BofA or BoA) is an American multinational investment banking, investment bank and financial services holding company headquartered at the Bank of America Corporate Center in ...
. Along with
BofA Securities BofA Securities, Inc., previously Bank of America Merrill Lynch (BAML), is an American multinational investment banking division under the auspices of Bank of America. It is not to be confused with Merrill, the stock brokerage and trading pla ...
, the investment banking arm, both firms engage in
prime brokerage Prime brokerage is the generic term for a bundled package of services offered by investment banks, wealth management firms, and securities dealers to hedge funds which need the ability to borrow securities and cash in order to be able to inves ...
and
broker-dealer In financial services, a broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers. Broker-dealers are at the heart of the securities and ...
activities. The firm is headquartered in
New York City New York, often called New York City (NYC), is the most populous city in the United States, located at the southern tip of New York State on one of the world's largest natural harbors. The city comprises five boroughs, each coextensive w ...
, and once occupied the entire 34 stories of 250 Vesey Street, part of the Brookfield Place complex in
Manhattan Manhattan ( ) is the most densely populated and geographically smallest of the Boroughs of New York City, five boroughs of New York City. Coextensive with New York County, Manhattan is the County statistics of the United States#Smallest, larg ...
. Merrill employs over 14,000 financial advisors and manages $2.8 trillion in client assets ($3.4 trillion for Global Wealth and Investment Management). The company also operates Merrill Edge, a division for investment and related services, including call center counsultancy. Prior to 2009, the company was publicly owned and traded on the
New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It is the List of stock exchanges, largest stock excha ...
. Merrill Lynch & Co. agreed to be acquired by Bank of America on September 14, 2008, at the height of the
2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...
, the same weekend that
Lehman Brothers Lehman Brothers Inc. ( ) was an American global financial services firm founded in 1850. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Goldman Sachs, Morgan Stanley, and Merril ...
was allowed to fail. The acquisition was completed in January 2009 and Merrill Lynch & Co., Inc. was merged into Bank of America Corporation in October 2018, with certain Bank of America subsidiaries continuing to carry the Merrill Lynch name, including the broker-dealer Merrill Lynch, Pierce, Fenner & Smith. In 2019, Bank of America rebranded the unit to "Merrill". Merrill Lynch rose to prominence on the strength of its network of financial advisors, sometimes referred to as the "thundering herd", that allowed it to place securities it underwrote directly. In contrast, many established Wall Street firms, such as
Morgan Stanley Morgan Stanley is an American multinational investment bank and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in 42 countries and more than 80,000 employees, the firm's clients in ...
, relied on groups of independent brokers for placement of the securities they underwrote. It was once known as the "Catholic" firm of Wall Street and most of its executives were
Irish Catholics Irish Catholics () are an ethnoreligious group native to Ireland, defined by their adherence to Catholic Christianity and their shared Irish ethnic, linguistic, and cultural heritage.The term distinguishes Catholics of Irish descent, particul ...
.


History


Founding and early history

The company was founded on January 6, 1914, when Charles E. Merrill opened Charles E. Merrill & Co. for business at 7
Wall Street Wall Street is a street in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It runs eight city blocks between Broadway (Manhattan), Broadway in the west and South Street (Manhattan), South Str ...
in
New York City New York, often called New York City (NYC), is the most populous city in the United States, located at the southern tip of New York State on one of the world's largest natural harbors. The city comprises five boroughs, each coextensive w ...
. A few months later, Merrill's friend, Edmund C. Lynch, joined him, and in 1915 the name was officially changed to ''Merrill, Lynch & Co.'' At that time, the firm's name included a
comma The comma is a punctuation mark that appears in several variants in different languages. Some typefaces render it as a small line, slightly curved or straight, but inclined from the vertical; others give it the appearance of a miniature fille ...
between ''Merrill'' and ''Lynch'', which was dropped in 1938. In 1916, Winthrop H. Smith joined the firm. In 1921, the company purchased
Pathé Exchange Pathé Exchange, commonly known as Pathé, was an American film production and distribution company, largely of Cinema of the United States, Hollywood's silent film, silent era. Known for its trailblazing newsreel and wide array of short film, s ...
, which later became
RKO Pictures RKO Radio Pictures Inc., commonly known as RKO Pictures or simply RKO, is an American film production and distribution company, historically one of the major film studios, "Big Five" film studios of Cinema of the United States, Hollywood's Clas ...
. In 1926, the firm acquired a controlling interest in Safeway Inc., transforming the small grocery store into the country's third-largest grocery store chain by the early 1930s. In 1930, Charles E. Merrill led the firm through a major restructuring, spinning-off the company's retail brokerage business to E. A. Pierce & Co. to focus on investment banking. Along with the business, Merrill also transferred the bulk of its employees, including Edmund C. Lynch and Winthrop H. Smith. Charles Merrill received a minority interest in E.A. Pierce in the transaction. Throughout the 1930s, E.A. Pierce remained the largest brokerage in the U.S. The firm, led by Edward A. Pierce, Edmund Lynch and Winthrop Smith proved to be one of the most innovative in the industry, introducing IBM machines into the business's record keeping. Additionally, by 1938, E.A. Pierce controlled the largest wire network with a private network of over 23,000 miles of
telegraph Telegraphy is the long-distance transmission of messages where the sender uses symbolic codes, known to the recipient, rather than a physical exchange of an object bearing the message. Thus flag semaphore is a method of telegraphy, whereas ...
wires. These wires were typically used for
orders Order, ORDER or Orders may refer to: * A socio-political or established or existing order, e.g. World order, Ancien Regime, Pax Britannica * Categorization, the process in which ideas and objects are recognized, differentiated, and understood * H ...
. Despite its strong position in the market, E.A. Pierce was struggling financially in the 1930s and was thinly capitalized. Following the death of Edmund C. Lynch in 1938, Winthrop Smith began discussions with Charles E. Merrill, who owned a minority interest in E.A. Pierce about a possible merger of the two firms. On April 1, 1940, Merrill Lynch, merged with Edward A. Pierce's E. A. Pierce & Co. and Cassatt & Co., a Philadelphia-based brokerage firm in which both Merrill Lynch and E.A. Pierce held an interest. and was briefly known as ''Merrill Lynch, E. A. Pierce, and Cassatt.'' The company became the first on Wall Street to publish an annual fiscal report in 1941. In 1941, Merrill Lynch, E. A. Pierce, and Cassatt merged with Fenner & Beane, a New Orleans–based investment bank and commodities company. Throughout the 1930s, Fenner & Beane was consistently the second largest securities firm in the U.S. The combined firm, which became the clear leader in securities brokerage in the U.S., was renamed ''Merrill Lynch, Pierce, Fenner & Beane.''


Post-war years

In 1952, the company formed Merrill Lynch & Co. as a
holding company A holding company is a company whose primary business is holding a controlling interest in the Security (finance), securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own Share ...
and officially incorporated after nearly half a century as a partnership. On December 31, 1957, ''
The New York Times ''The New York Times'' (''NYT'') is an American daily newspaper based in New York City. ''The New York Times'' covers domestic, national, and international news, and publishes opinion pieces, investigative reports, and reviews. As one of ...
'' referred to that name as "a sonorous bit of Americana" and said, "After sixteen years of popularizing t Merrill Lynch, Pierce, Fenner, and Beane is going to change it—and thereby honor the man who has been largely responsible for making the name of a brokerage house part of an American saga," Winthrop H. Smith, who had been running the company since 1940. The merger made the company the largest securities firm in the world, with offices in more than 98 cities and membership on 28 exchanges. At the start of the firm's fiscal year on March 1, 1958, the firm's name became "Merrill Lynch, Pierce, Fenner & Smith" and the company became a member of the
New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It is the List of stock exchanges, largest stock excha ...
."Revising a Sonorous Piece of Americana: Merrill Lynch, Pierce, Fenner and Smith." ''The New York Times'', December 31, 1957, p. 29 In 1964, Merrill Lynch acquired C. J. Devine & Co., the leading dealer in U.S. Government Securities. The merger came together due to the death of Christopher J. Devine in May 1963. The C. J. Devine & Co. partners, referred to as "The Devine Boys", formed Merrill Lynch Government Securities Inc., giving the firm a strong presence in the government securities market. The Government Securities business brought Merrill Lynch the needed leverage to establish many of the unique money market products and government bond mutual fund products, responsible for much of the firm's growth in the 1970s and 1980s. In June 1971, the company became a
public company A public company is a company whose ownership is organized via shares of share capital, stock which are intended to be freely traded on a stock exchange or in over-the-counter (finance), over-the-counter markets. A public (publicly traded) co ...
via an
initial public offering An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investm ...
, a year after the
New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It is the List of stock exchanges, largest stock excha ...
allowed member firms to become publicly-owned. It was a
multinational corporation A multinational corporation (MNC; also called a multinational enterprise (MNE), transnational enterprise (TNE), transnational corporation (TNC), international corporation, or stateless corporation, is a corporate organization that owns and cont ...
with over US$1.8
trillion ''Trillion'' is a number with two distinct definitions: *1,000,000,000,000, i.e. one million 1,000,000, million, or (ten to the twelfth Exponentiation, power), as defined on the long and short scales, short scale. This is now the meaning in bot ...
in client assets operating in more than 40 countries around the world. In 1977, the company introduced its
Cash management Cash management refers to a broad area of finance involving the collection, handling, and usage of cash. It involves assessing market liquidity, cash flow, and investments. In banking, cash management, or treasury management, is a marketing term ...
account (CMA), which enabled customers to transfer all their cash into a
money market fund A money market fund (also called a money market mutual fund) is an open-end mutual fund that invests in short-term debt securities such as US Treasury bills and commercial paper. Money market funds are managed with the goal of maintaining a hig ...
, and included check-writing capabilities and a credit card. In 1978, it significantly buttressed its securities underwriting business by acquiring White Weld & Co., a small but prestigious old-line investment bank. In the late 1990s, Maxim Shashenkov (), who was in charge of Alfa-Bank's Alfa Securities Ltd, London, of the
Alfa Group Alfa Group Consortium () is a Russian international privately owned investment groups, with interests in oil and gas, commercial and investment banking, asset management, insurance, retail trade, telecommunications, water utilities and special ...
of companies, was formerly Vice President for Russia of the London branch of Merrill Lynch.


Canadian operations in the 1990s

In 1990, the company sold its Canadian private client operations to CIBC Wood Gundy. In June 1998, Merrill Lynch re-entered the Canadian investment business with its purchase of Midland Walwyn Inc. At the time,
Canada Canada is a country in North America. Its Provinces and territories of Canada, ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, making it the world's List of coun ...
was the seventh-largest market for personal investment. In December 2001, Merrill Lynch sold Midland Walwyn to CIBC Wood Gundy.


Investment in TMS Entertainment (2003)

In 2003, Merrill Lynch became the second-largest shareholder of Japanese animation studio
TMS Entertainment , formerly known as the is a Japanese animation studio owned by Sega Corporation. TMS is one of the oldest and most renowned animation studios in Japan, known for its numerous anime franchises such as '' Detective Conan'', '' Lupin the Third ...
. In a report to the Finance Ministry, the Merrill Lynch group said it had acquired a 7.54% stake in TMS by purchasing 3.33 million shares. Merrill Lynch purchased the stake purely for investment purposes and had no intention of acquiring control of the firm's management.


Subprime mortgage crisis

In November 2007, Merrill Lynch announced it would write-down $8.4 billion (~$ in ) in losses associated with the
subprime mortgage crisis The American subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010, contributing to the 2008 financial crisis. It led to a severe economic recession, with millions becoming unemployed and many busines ...
, and terminated E. Stanley O'Neal as its chief executive. O'Neal had earlier approached
Wachovia Wachovia was a diversified financial services company based in Charlotte, North Carolina. Before its acquisition by Wells Fargo and Company in 2008, Wachovia was the fourth-largest bank holding company in the United States, based on total asset ...
for a merger, without prior Board approval, but the talks ended after O'Neal's dismissal. Merrill Lynch named
John Thain John Alexander Thain (born May 26, 1955) is an American financial executive and investment banker. He was president and co-COO of Goldman Sachs, and then CEO of the New York Stock Exchange. Thain then became the last chairman and CEO of Merrill ...
as its new CEO that month. In his first days at work in December 2007, Thain made changes in Merrill Lynch's top management, announcing that he would bring in former
New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It is the List of stock exchanges, largest stock excha ...
(NYSE) colleagues such as Nelson Chai as CFO and Margaret D. Tutwiler as head of communications. Later that month, the firm announced it would sell its commercial finance business to
General Electric General Electric Company (GE) was an American Multinational corporation, multinational Conglomerate (company), conglomerate founded in 1892, incorporated in the New York (state), state of New York and headquartered in Boston. Over the year ...
, and would sell shares of its stock to
Temasek Holdings Temasek Holdings (Private) Limited ( ) is a Singaporean State ownership, state-owned multinational investment firm. Incorporated on 25 June 1974, Temasek has a net portfolio of US$288 billion (S$389 billion) as of 2024. Headquartered at Orchard ...
, a
Singapore Singapore, officially the Republic of Singapore, is an island country and city-state in Southeast Asia. The country's territory comprises one main island, 63 satellite islands and islets, and one outlying islet. It is about one degree ...
government investment group, in an effort to raise capital. The deal raised more than $6 billion. In July 2008, Thain announced $4.9 billion fourth-quarter losses for the company from defaults and bad investments in the ongoing mortgage crisis. In one year between July 2007 and July 2008, Merrill Lynch lost $19.2 billion, or $52 million daily. The company's stock price had also declined significantly during that time. Two weeks later, the company announced the sale of select hedge funds and securities in an effort to reduce their exposure to mortgage-related investments. Temasek Holdings agreed to purchase the funds and increase its investment in the company by $3.4 billion. Then-
New York Attorney General The attorney general of New York is the chief legal officer of the U.S. state of New York and head of the Department of Law of the state government. The office has existed in various forms since 1626, originally established under the Dutch c ...
Andrew Cuomo Andrew Mark Cuomo ( , ; born December 6, 1957) is an American politician and lawyer who served as the 56th governor of New York from 2011 until his resignation in 2021. A member of the Democratic Party and son of former governor Mario Cuomo, ...
threatened to sue Merrill Lynch in August 2008 over its misrepresentation of the risk on mortgage-backed securities. A week earlier, Merrill Lynch had offered to buy back $12 billion in auction-rate debt and said it was surprised by the lawsuit. Three days later, the company froze hiring and revealed that it had charged almost $30 billion in losses to its subsidiary in the United Kingdom, exempting them from taxes in that country. On August 22, 2008, CEO John Thain announced an agreement with the
Massachusetts Secretary of the Commonwealth The secretary of the Commonwealth of Massachusetts is a constitutional officer in the executive branch of the Commonwealth (U.S. state), Commonwealth of Massachusetts. Originally appointed under authority of the Monarchy of the United Kingdom, Eng ...
to buy back all auction-rate securities from customers with less than $100 million in deposit with the firm, beginning in October 2008 and expanding in January 2009. On September 5, 2008
Goldman Sachs The Goldman Sachs Group, Inc. ( ) is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered in Lower Manhattan in New York City, with regional headquarters in many internationa ...
downgraded Merrill Lynch's stock to "conviction sell" and warned of further losses at the company. Bloomberg reported in September 2008 that Merrill Lynch had lost $51.8 billion (~$ in ) on mortgage-backed securities as part of the subprime mortgage crisis.


CDO losses

Merrill Lynch, like many other banks, became heavily involved in the mortgage-based
collateralized debt obligation A collateralized debt obligation (CDO) is a type of structured finance, structured asset-backed security (ABS). Originally developed as instruments for the corporate debt markets, after 2002 CDOs became vehicles for refinancing Mortgage-backed se ...
(CDO) market in the early 2000s. According to an article in ''Credit'' magazine, Merrill's rise to be the leader of the CDO market began in 2003 when Christopher Ricciardi brought his CDO team from
Credit Suisse First Boston Credit Suisse First Boston (also known as CSFB and CS First Boston) was the investment banking affiliate of Credit Suisse headquartered in New York. The company was created by the merger of First Boston Corporation and Credit Suisse Group in 1 ...
to Merrill. To provide a ready supply of mortgages for the CDOs, Merrill purchased First Franklin Financial Corp., one of the largest subprime lenders in the country, in December 2006. Between 2006 and 2007, Merrill was "lead underwriter" on 136 CDOs worth $93 billion. By the end of 2007, the value of these CDOs was collapsing, but Merrill had held onto portions of them, creating billions of dollars in losses for the company. In mid-2008, Merrill sold a group of CDOs that had once been valued at $30.6 billion to
Lone Star Funds Lone Star Funds, legal name of main entity Lone Star Global Acquisitions, Ltd. is a global private equity firm that invests in corporate equity, real estate, credit, and other financial assets. The founder of Lone Star established its first fu ...
for $1.7 billion in cash and a $5.1 billion loan. In April 2009, bond insurance company MBIA sued Merrill Lynch for fraud and five other violations. These were related to the credit default swap "insurance" contracts Merrill had bought from MBIA on four of Merrill's mortgage-based
collateralized debt obligation A collateralized debt obligation (CDO) is a type of structured finance, structured asset-backed security (ABS). Originally developed as instruments for the corporate debt markets, after 2002 CDOs became vehicles for refinancing Mortgage-backed se ...
s. These were the "ML-Series" CDOs, Broderick CDO 2, Highridge ABS CDO I, Broderick CDO 3, and Newbury Street CDO. MBIA claimed, among other things, that Merrill defrauded MBIA about the quality of these CDOs, and that it was using the complicated nature of these particular CDOs (CDOs squared and cubed) to hide the problems it knew about in the securities that the CDOs were based on. However, in 2010 Justice Bernard Fried disallowed all but one of the charges: the claim by MBIA that Merrill had committed
breach of contract Breach of contract is a legal cause of action and a type of civil wrong, in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other part ...
by promising the CDOs were worthy of an AAA rating when, it alleges, in reality, they weren't. When the CDOs lost value, MBIA wound up owing Merrill a large amount of money. Merrill disputed MBIA's claims. In 2009,
Rabobank Rabobank (; full name: ''Coöperatieve Rabobank U.A.'') is a Dutch multinational banking and financial services company headquartered in Utrecht, Netherlands. The group comprises 89 local Dutch Rabobanks (2019), a central organisation (Raboban ...
sued Merrill over a CDO named Norma. Rabobank later claimed that its case against Merrill was very similar to the SEC's fraud charges against
Goldman Sachs The Goldman Sachs Group, Inc. ( ) is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered in Lower Manhattan in New York City, with regional headquarters in many internationa ...
and its Abacaus CDOs. Rabobank alleged that a hedge fund named Magnetar Capital had chosen assets to go into Norma, and allegedly bet against them, but that Merrill had not informed Rabobank of this fact. Instead, Rabobank alleges that Merrill told it that NIR Group was selecting the assets. When the CDO value tanked, Rabobank was left owing Merrill a large amount of money. Merrill disputed the arguments of
Rabobank Rabobank (; full name: ''Coöperatieve Rabobank U.A.'') is a Dutch multinational banking and financial services company headquartered in Utrecht, Netherlands. The group comprises 89 local Dutch Rabobanks (2019), a central organisation (Raboban ...
, with a spokesman claiming "The two matters are unrelated and the claims today are not only unfounded but weren't included in the Rabobank lawsuit filed nearly a year ago".


Sale to Bank of America

Significant losses were attributed to the drop in value of its large and unhedged mortgage portfolio in the form of
collateralized debt obligation A collateralized debt obligation (CDO) is a type of structured finance, structured asset-backed security (ABS). Originally developed as instruments for the corporate debt markets, after 2002 CDOs became vehicles for refinancing Mortgage-backed se ...
s. Trading partners' loss of confidence in Merrill Lynch's solvency and ability to refinance
money market The money market is a component of the economy that provides short-term funds. The money market deals in short-term loans, generally for a period of a year or less. As short-term securities became a commodity, the money market became a compo ...
obligations ultimately led to its sale. During the week of September 8, 2008,
Lehman Brothers Lehman Brothers Inc. ( ) was an American global financial services firm founded in 1850. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Goldman Sachs, Morgan Stanley, and Merril ...
came under severe liquidity pressures, with its survival in question. If Lehman Brothers failed, investors were afraid that the contagion could spread to the other surviving investment banks. On Sunday, September 14, 2008,
Bank of America The Bank of America Corporation (Bank of America) (often abbreviated BofA or BoA) is an American multinational investment banking, investment bank and financial services holding company headquartered at the Bank of America Corporate Center in ...
announced it was in talks to purchase Merrill Lynch for $38.25 billion (~$ in ) in stock. Later that day, Merrill Lynch was sold to Bank of America for 0.8595 shares of Bank of America common stock for each Merrill Lynch common share, or about US$50 billion or $29 per share. This price represented a 70.1% premium over the September 12 closing price or a 38% premium over Merrill's
book value In accounting, book value (or carrying value) is the value of an asset according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made ...
of $21 (~$ in ) a share, but a discount of 61% from its September 2007 price. Congressional testimony by Bank of America CEO Kenneth Lewis, as well as internal emails released by the
House Oversight Committee The Committee on Oversight and Government Reform is the main investigative United States congressional committee, committee of the United States House of Representatives. The committee's broad jurisdiction and legislative authority make it one o ...
, indicated that the merger was transacted under pressure from federal officials, who said that they would otherwise seek the replacement of Bank of America's management as a condition of any government assistance. In March 2009, it was reported that in 2008, Merrill Lynch received billions of dollars from its insurance arrangements with
AIG American International Group, Inc. (AIG) is an American multinational finance and insurance corporation with operations in more than 80 countries and jurisdictions. As of 2023, AIG employed 25,200 people. The company operates through three core ...
, including $6.8 billion from funds provided by the United States government to bail out AIG.


Post-merger with Bank of America

After merging Merrill Lynch into its businesses,
Bank of America The Bank of America Corporation (Bank of America) (often abbreviated BofA or BoA) is an American multinational investment banking, investment bank and financial services holding company headquartered at the Bank of America Corporate Center in ...
continued to operate Merrill Lynch for its
wealth management Wealth management (WM) or wealth management advisory (WMA) is an investment advisory service that provides financial management and wealth advisory services to a wide array of clients ranging from affluent to high-net-worth (HNW) and ultra-hi ...
services and integrated Merrill Lynch's investment bank into the newly formed
BofA Securities BofA Securities, Inc., previously Bank of America Merrill Lynch (BAML), is an American multinational investment banking division under the auspices of Bank of America. It is not to be confused with Merrill, the stock brokerage and trading pla ...
.


Launch of Merrill Edge

On June 21, 2010, the company launched Merrill Edge, an
electronic trading platform In finance, an electronic trading platform, also known as an online trading platform, is a computer software program that can be used to place orders for financial products over a network with a financial intermediary. Various financial products ...
.


Rebranding

In February 2019, Bank of America announced the division was to be rebranded from "Merrill Lynch" to "Merrill".


Regulatory actions


Orange County settlement

In 1998, Merrill Lynch paid
Orange County, California Orange County (officially the County of Orange; often initialized O.C.) is a county (United States), county located in the Los Angeles metropolitan area in Southern California, United States. As of the 2020 United States census, the population ...
$400 million (~$ in ) to settle accusations that it sold inappropriate and risky investments to former county treasurer Robert Citron. Citron lost $1.69 billion, which forced the county to file for bankruptcy in December 1994. The county sued a dozen or more securities companies, advisors and accountants, but Merrill settled without admitting liability, paying $400 million of a total $600 million recovered by the county.


Analyst Research settlement

In 2002, Merrill Lynch agreed to pay out $100 million (~$ in ) for publishing misleading research. As part of the agreement with the New York attorney general and other state securities regulators, Merrill Lynch agreed to increase research disclosure and work to decouple research from investment banking.


Misleading of investors by Henry Blodget

Between 1999 and 2001, during the
dot-com bubble The dot-com bubble (or dot-com boom) was a stock market bubble that ballooned during the late-1990s and peaked on Friday, March 10, 2000. This period of market growth coincided with the widespread adoption of the World Wide Web and the Interne ...
, Henry Blodget, a well-known analyst at Merrill Lynch, gave assessments about stocks in private emails that conflicted with what he publicly published via Merrill. In 2003, he was charged with civil securities fraud by the
U.S. Securities and Exchange Commission The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...
. He settled without admitting or denying the allegations and was subsequently barred from the securities industry for life. He paid a $2 million fine and $2 million disgorgement.


Enron/Merrill Lynch Nigerian barge

In 2004, convictions of Merrill executives marked the only instance in the
Enron Enron Corporation was an American Energy development, energy, Commodity, commodities, and services company based in Houston, Texas. It was led by Kenneth Lay and developed in 1985 via a merger between Houston Natural Gas and InterNorth, both re ...
investigation where the government criminally charged any officials from the banks and securities firms that allegedly helped Enron execute its
accounting scandals Accounting scandals are business scandals that arise from intentional manipulation of financial statements with the disclosure of financial misdeeds by trusted executives of corporations or governments. Such misdeeds typically involve complex ...
. The case revolved around a 1999 transaction involving Merrill, Enron and the sale of some electricity-producing barges off the coast of Nigeria. The charges alleged that the 1999 sale of an interest in Nigerian power barge by an Enron entity to Merrill Lynch was a sham that allowed Enron to illegally book about $12 million (~$ in ) in pretax profit, when in fact there was no real sale and no real profit. Four former Merrill top executives and two former midlevel Enron officials faced conspiracy and fraud charges. The Merrill Lynch executives were convicted, but, unusually, all three of those that appealed subsequently had their charges overturned by the 5th U.S. Circuit Court of Appeals in New Orleans who called the conspiracy and wire fraud charges "flawed." The Justice Department decided not to retry the case after the reversal of the verdict. Merrill reached its own settlement, firing bankers and agreeing to the outside oversight of its structured-finance transactions. It also settled civil fraud charges brought by the U.S. Securities and Exchange Commission, without admitting or denying fault.


Discrimination charges

On June 26, 2007, the U.S.
Equal Employment Opportunity Commission The U.S. Equal Employment Opportunity Commission (EEOC) is a federal agency that was established via the Civil Rights Act of 1964 to administer and enforce civil rights laws against workplace discrimination. The EEOC investigates discrimination ...
(EEOC) brought suit against Merrill Lynch, alleging the firm discriminated against Dr. Majid Borumand because of his
Iranian Iranian () may refer to: * Something of, from, or related to Iran ** Iranian diaspora, Iranians living outside Iran ** Iranian architecture, architecture of Iran and parts of the rest of West Asia ** Iranian cuisine, cooking traditions and practic ...
nationality and
Islam Islam is an Abrahamic religions, Abrahamic monotheistic religion based on the Quran, and the teachings of Muhammad. Adherents of Islam are called Muslims, who are estimated to number Islam by country, 2 billion worldwide and are the world ...
ic religion, with "reckless disregard" for his protected civil rights. The EEOC lawsuit maintained that violations by the company were intentional and committed with malice. In another case concerning mistreatment of another Iranian employee by Merrill Lynch, on July 20, 2007, a
National Association of Securities Dealers The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) that regulates member brokerage firms and exchange markets. FINRA is the successor to the National Associati ...
arbitration Arbitration is a formal method of dispute resolution involving a third party neutral who makes a binding decision. The third party neutral (the 'arbitrator', 'arbiter' or 'arbitral tribunal') renders the decision in the form of an 'arbitrati ...
panel ordered the company to pay Fariborz Zojaji, a former Iranian employee, $1.6 million (~$ in ) for being fired due to his Persian ethnicity. Merrill Lynch was criticized by both the
National Iranian American Council The National Iranian American Council (NIAC; ) is a lobbying group widely viewed as the de facto "Iran Lobby" in Washington, D.C. due to its history of lobbying for stances on behalf of, and aligned with, Iran, the Islamic Republic of Iran. NIAC ...
, and the American-Arab Anti-Discrimination Committee. On August 13, 2008, a New Jersey appeals court rendered a ruling against Merrill Lynch in a lawsuit filed by Darren Kwiatkowski, a gay employee who was called a “stupid fag” by another employee. In August 2013, the company agreed to pay $160 million to settle a
class action A class action is a form of lawsuit. Class Action may also refer to: * ''Class Action'' (film), 1991, starring Gene Hackman and Mary Elizabeth Mastrantonio * Class Action (band), a garage house band * "Class Action" (''Teenage Robot''), a 2002 e ...
racism Racism is the belief that groups of humans possess different behavioral traits corresponding to inherited attributes and can be divided based on the superiority of one Race (human categorization), race or ethnicity over another. It may also me ...
lawsuit brought by a longtime U.S. employee in 2005. At the time the lawsuit was filed, 2% of the brokers at the company were
black Black is a color that results from the absence or complete absorption of visible light. It is an achromatic color, without chroma, like white and grey. It is often used symbolically or figuratively to represent darkness.Eva Heller, ''P ...
, despite a 30-year-old
consent decree A consent decree is an agreement or settlement that resolves a dispute between two parties without admission of guilt (in a criminal case) or liability (in a civil case). Most often it is such a type of settlement in the United States. The ...
it had signed with the EEOC that required the company to increase its proportion of black brokers to 6.5%, and despite the fact that in 25 states, the company did not have a single black broker. The funds were available to all black brokers and trainees at the firm since May 2001, estimated to be 700–1,200 people. During the case, Merrill's black CEO,
Stanley O'Neal Earnest Stanley O'Neal (born October 7, 1951) is a retired American business executive. He was CEO of Merrill Lynch from 2002 to 2007, and chairman and CEO from 2003 to 2007, having worked at the firm since 1986. He was the first African-America ...
, said that black brokers may have a harder time getting business for the company since most of its clients were
white White is the lightest color and is achromatic (having no chroma). It is the color of objects such as snow, chalk, and milk, and is the opposite of black. White objects fully (or almost fully) reflect and scatter all the visible wa ...
.


Market timing settlement

In March 2005, Merrill Lynch paid a $10 million (~$ in ) civil penalty to settle allegations of improper activities at the firm's
Fort Lee, New Jersey Fort Lee is a Borough (New Jersey), borough at the eastern border of Bergen County, New Jersey, Bergen County, in the U.S. state of New Jersey, situated along the Hudson River atop The Palisades (Hudson River), The Palisades. As of the 2020 Uni ...
office. Three financial advisors, and a fourth who was involved to a lesser degree, placed 12,457 trades for Millennium Partners, a client, in at least 521 mutual funds and 63 mutual fund sub-accounts of at least 40 variable annuities. Millennium made profits in over half of the funds and fund sub-accounts. In those funds where Millennium made profits, its gains totalled about $60 million. Merrill Lynch failed to reasonably supervise these financial advisers, whose market timing siphoned short-term profits out of mutual funds and harmed long-term investors.


2008 bonus payments

In 2008, Merrill Lynch arranged for payment $3.6 billion in bonuses, one-third of the money received from the
Troubled Asset Relief Program The Troubled Asset Relief Program (TARP) is a program of the United States government to purchase toxic assets and equity from financial institutions to strengthen its financial sector that was passed by Congress and signed into law by U.S. Presi ...
, for performance that year in what appeared to be "special timing," despite reported losses of $27 billion the same year.


Mismarking

In 2010, a Merrill Lynch trader in London who mismarked positions he had on behalf of the bank by $100 million (~$ in ) to cover up his losses was banned by the United Kingdom's
Financial Services Authority The Financial Services Authority (FSA) was a quasi-judicial body accountable for the regulation of the financial services industry in the United Kingdom between 2001 and 2013. It was founded as the Securities and Investments Board (SIB) in 1985 ...
(FSA) from working in the securities industry in the UK for at least five years.


Misleading customers about trading venues

On 19 June 2018, the U.S. Securities and Exchange Commission (SEC) charged Merrill Lynch of misleading brokerage customers about trading venues between 2008 and 2013. Merrill Lynch admitted wrongdoing and agreed to pay a $42 million penalty.


Improper handling of ADRs

On 22 March 2019, Merrill Lynch agreed to pay more than $8 million (~$ in ) to settle charges of improper handling of pre-released American depositary receipts under investigation of the U.S. Securities and Exchange Commission. Merrill Lynch neither admitted nor denied the investigation findings but agreed to pay disgorgement of more than $4.4 million in ill-gotten gains plus $724,000 in prejudgment interest and an additional penalty of $2.89 million.


See also

*
Broker-dealer In financial services, a broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers. Broker-dealers are at the heart of the securities and ...
* '' Calibuso, et al. v. Bank of America Corp., et al.'' *
Credit crunch A credit crunch (a credit squeeze, credit tightening or credit crisis) is a sudden reduction in the general availability of loans (or credit) or a sudden tightening of the conditions required to obtain a loan from banks. A credit crunch generally ...
*
Liquidity crisis In financial economics, a liquidity crisis is an acute shortage of ''liquidity''. Liquidity may refer to market liquidity (the ease with which an asset can be converted into a liquid medium, e.g. cash), funding liquidity (the ease with which borrow ...
* '' Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit'', a 2006 Supreme Court case involving securities fraud claims. * '' Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning'', a 2016 Supreme Court case involving
naked short selling Naked short selling, or naked shorting, is the practice of short-selling a tradable asset of any kind without first borrowing the asset from someone else or ensuring that it can be borrowed. When the seller does not obtain the asset and deli ...
claims. * List of UK judgments relating to excluded subject matter *
Primary dealer A primary dealer is a firm that buys government securities directly from a government, with the intention of reselling them to others, thus acting as a market maker of government securities. The government may regulate the behaviour and number of i ...


References


Further reading

* * * * *


External links

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