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Merrill (officially Merrill Lynch, Pierce, Fenner & Smith Incorporated), previously branded Merrill Lynch, is an American
investment management Investment management is the professional asset management Asset management refers to a systematic approach to the governance and realization of value from the things that a group or entity is responsible for, over their whole life cycles. It ...
and
wealth management Wealth management (WM) or wealth management advisory (WMA) provides services to a wide array of clients ranging from affluent Wealth is the abundance of valuable financial asset A financial asset is a non-physical asset In financial accountan ...
division of
Bank of America The Bank of America Corporation (simply referred to as Bank of America, often abbreviated as BofA or BoA) is an American multinational investment bank Investment is the dedication of an asset to attain an increase in value over a period o ...

Bank of America
. 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 Lynch, Merrill, the wealth management ...
, the investment banking arm, both firms engage in
prime brokerage Prime brokerage is the generic name for a bundled package of services offered by investment banks, Wealth management, wealth management firms, and Security (finance), securities dealers to hedge funds which need the ability to borrow securities an ...
and
broker-dealerIn financial services Financial services are the economic services provided by the finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation a ...
activities. The firm is headquartered in New York City, and once occupied the entire 34 stories of
250 Vesey Street 250 Vesey Street, formerly Four World Financial Center, is a part of the Brookfield Place (New York City), Brookfield Place complex in Lower Manhattan, which houses the financial offices of Merrill Lynch. Rising 34 floors and , and situated betw ...
, part of the
Brookfield Place
Brookfield Place
complex in
Manhattan Manhattan (), known regionally as ''The City'', is the most densely populated and geographically smallest of the of . It is the urban core of the , and coextensive with New York County, one of the of the of . Manhattan serves as the city's ...

Manhattan
. Merrill employs over 14,000 financial advisors and manages $2.3 trillion in client assets. The company also operates
Merrill Edge Merrill Edge is 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 financ ...
, 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 A financial intermediary is an ...
. 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 A stock exchange, securities exchange, or bourse is an Exchange (organized market), exchange where stockbrokers and stock trader, traders can buy an ...

New York Stock Exchange
. Merrill Lynch & Co. agreed to be acquired by Bank of America on September 14, 2008, at the height of the
financial crisis of 2007–2008 The financial crisis of 2007–2008, or global financial crisis (GFC), was a severe worldwide economic crisis An economy (from Greek οίκος – "household" and νέμoμαι – "manage") is an area of the production, distribution and t ...
, the same weekend that
Lehman Brothers Lehman Brothers Holdings Inc. () was a global financial services firm founded in 1847. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank Investment is the dedication of an asset to attain an increase in valu ...

Lehman Brothers
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 2013, 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 Financial services are the Service (economics), economic services provided by the finance industry, which encompasses a broad range of businesses that manage ...
, 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 which is native to Irelandhttp://umanitoba.ca/colleges/st_pauls/ccha/Back%20Issues/CCHA1983-84/Nicolson.pdf and its members are both Catholic Church, Catholic and Irish people, Irish. Irish Catholics ha ...
.


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 an eight-block-long street in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It runs between Broadway (Manhattan), Broadway in the west to South Street (Manhattan), South Street and t ...

Wall Street
in
New York City New York, often called New York City to distinguish it from , or NYC for short, is the in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the major city in the United States. Located at the s ...

New York City
. 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 Punctuation (or sometimes interpunction) is the use of spacing, conventional signs (called punctuation marks), and certain typographical devices as aids to the understanding and correct reading of written text, wh ...
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 was an independent American film production and distribution company from 1921 through 1927 after being established in 1904 as an American subdivision of French firm Pathé. History As early as 1900, the French company Pathé, th ...
, which later became
RKO Pictures RKO Pictures was an American film production and distribution company. In its original incarnation, as RKO Radio Pictures, Inc. (a subsidiary of Radio-Keith-Orpheum, aka: RKO) it was one of the Big FiveBig Five may refer to: Animals * the ...
. In 1926, the firm acquired a controlling interest in
Safeway Inc. Safeway is an American supermarket A supermarket is a self-service shop offering a wide variety of food Food is any substance consumed to provide nutritional support for an organism In biology, an organism (from Ancient Gree ...
, 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' 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 is a method of telegraphy, whereas is not. Ancien ...

telegraph
wires. These wires were typically used for
orders Orders is a surname In some cultures, a surname, family name, or last name is the portion of one's personal name that indicates their family, tribe or community. Practices vary by culture. The family name may be placed at either the start of ...
. 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 securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...
and officially incorporated after nearly half a century as a partnership. On December 31, 1957, ''
The New York Times ''The New York Times'' (''NYT'' or ''NY Times'') is an American daily newspaper based in New York City with a worldwide readership. Founded in 1851, the ''Times'' has since won List of Pulitzer Prizes awarded to The New York Times, 130 Pulit ...

The New York Times
'' referred to that name as "a sonorous bit of Americana" and said, "After sixteen years of popularizing 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 A stock exchange, securities exchange, or bourse is an Exchange (organized market), exchange where stockbrokers and stock trader, traders can buy an ...

New York Stock Exchange
."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, publicly traded company, publicly held company, publicly listed company, or public limited company is a whose ownership is organized via shares of which are intended to be freely traded on a or in markets. A public company ...
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 retail (individual) investors. An IPO is typically underwritten by one or more investment ...
, a year after the
New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange A stock exchange, securities exchange, or bourse is an Exchange (organized market), exchange where stockbrokers and stock trader, traders can buy an ...

New York Stock Exchange
allowed member firms to become publicly-owned. It was a
multinational corporation A multinational company (MNC) is a corporate A corporation is an organization—usually a group of people or a company A company, abbreviated as co., is a Legal personality, legal entity representing an association of people, whether Nat ...
with over US$1.8
trillion A trillion is a number with two distinct definitions: * 1,000,000,000,000, i.e. one million million, or (ten to the twelfth power Power typically refers to: * Power (physics) In physics, power is the amount of energy transferred or converted ...
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 Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Sa ...
account (CMA), which enabled customers to sweep all their cash into a
money market fund A money market fund (also called a money market mutual fund) is an open-ended 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 h ...

money market fund
, and included check-writing capabilities and a
credit card #REDIRECT Credit card A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's promise to the card issuer to pay them for the amounts plus the ...

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 (russian: Максим Шашенков), who was in charge of
Alfa-Bank Alfa Bank JSC, the corporate treasury of the Alfa Group, is one of the largest private commercial banks in Russia Russia (russian: link=no, Россия, , ), or the Russian Federation, is a country spanning Eastern Europe and Northern A ...

Alfa-Bank
's Alfa Securities Ltd, London, of the
Alfa Group Alfa Group Consortium () is one of Russia's largest privately owned investment groups, with interests in oil and gas, commercial and investment banking, asset management, insurance, retail trade, telecommunications, water utilities and special si ...

Alfa Group
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 CIBC Wood Gundy is the Canadian full-service retail brokerage division of CIBC World Markets, CIBC World Markets Inc., a subsidiary of the Canadian Imperial Bank of Commerce (CIBC). Through its network of over 1,000 investment advisors working in ...
. 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 the northern part of North America. Its Provinces and territories of Canada, ten provinces and three territories extend from the Atlantic Ocean, Atlantic to the Pacific Ocean, Pacific and northward into the Arctic Oce ...

Canada
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 , also known as or , is a Japanese established on October 22, 1946. TMS is one of the oldest and most famous studios in Japan, best known for numerous anime franchises such as ', ', ', ', ', ', ' ', ', ', ', ' (until 1 ...
. 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 losses associated with the
subprime mortgage crisis The United States subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the 2007–2008 global financial crisis. It was triggered by a large decline in home prices after the collaps ...
, 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 assets ...
for a merger, without prior Board approval, but the talks ended after O'Neal's dismissal. Merrill Lynch named 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 A stock exchange, securities exchange, or bourse is an Exchange (organized market), exchange where stockbrokers and stock trader, traders can buy an ...

New York Stock Exchange
(NYSE) colleagues such as
Nelson Chai Nelson Joosuk Chai (born 1965) is an American investment banker An investment bank is a financial services Financial services are the Service (economics), economic services provided by the finance industry, which encompasses a broad range of bus ...
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) is an American Multinational corporation, multinational Conglomerate (company), conglomerate incorporated in New York State and headquartered in Boston. Until 2021, the company operated through GE Aviation, aviat ...
, and would sell shares of its stock to
Temasek Holdings Temasek Holdings (Private) Limited or simply Temasek, is a Singaporean holding company, owned by the Government of Singapore The Government of Singapore is defined by the Constitution of Singapore to mean the Executive (government), executiv ...
, a
Singapore Singapore (), officially the Republic of Singapore, is a sovereign state, sovereign island city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, bor ...

Singapore
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 In the , a state is a , of which there are currently 50. Bound together in a , each state holds al jurisdiction over a separate and defined geographic territor ...
Andrew Cuomo Andrew Mark Cuomo (; ; born December 6, 1957) is an American politician, author and lawyer serving as the 56th governor of New York The governor of the State of New York is the head of government The head of government is either ...

Andrew 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 Massachusetts Secretary of the Commonwealth is the principal public information officer of the government A government is the system or group of people governing an organized community, generally a State (polity), state. In the ...
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 headquartered in New York City. It offers services in investment management, securities, asset management, prime brokerage Prime ...

Goldman Sachs
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 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 asset-backed security An asset-backed security (ABS) is a Security (finance), security whose income payments and hence value are derived from and collateralized (or "backed") by a spe ...
(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:''This article is primarily about the former investment banking, capital markets and financial services division of Credit Suisse prior to the 2006 re-branding exercise. For the newly reorganized investment banking division of Credit Suisse, see he ...
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 is an American private equity firm A private-equity firm is an investment management company that provides financial backing and makes investments in the private equity Private equity (PE) typically refers to investment fund ...
for $1.7 billion in cash and a $5.1 billion loan. In April 2009,
bond insuranceBond insurance, also known as "financial guaranty insurance", is a type of insurance whereby an insurance company guarantees scheduled payments of interest and principal on a bond (finance), bond or other security in the event of a payment default by ...
company
MBIAMbia may refer to: * Mbya, or Mbiá, the name of several ethnic groups and languages of South America * MBIA MBIA, Inc. is a financial services company. It was founded in 1973 as the Municipal Bond Insurance Association. It is headquartered in P ...
sued Merrill Lynch for fraud and five other violations. These were related to the
credit default swap A credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default Default may refer to: Law * Default (law), the failure to do something required by law ** Defaul ...
"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 asset-backed security An asset-backed security (ABS) is a Security (finance), security whose income payments and hence value are derived from and collateralized (or "backed") by a spe ...
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 Law is a system of rules created and law enforcement, enforced through social or governmental institutions to regulate behavior,Robertson, ''Crimes against humanity'', 90. with its precise definition a matter of ...
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 Financial services are the Service (economics), economic services provided by the finance industry, which encompasses a broad ran ...

Rabobank
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 headquartered in New York City. It offers services in investment management, securities, asset management, prime brokerage Prime ...

Goldman Sachs
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, 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 asset-backed security An asset-backed security (ABS) is a Security (finance), security whose income payments and hence value are derived from and collateralized (or "backed") by a spe ...
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 which 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 In economics Economic ...
obligations ultimately led to its sale. During the week of September 8, 2008,
Lehman Brothers Lehman Brothers Holdings Inc. () was a global financial services firm founded in 1847. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank Investment is the dedication of an asset to attain an increase in valu ...

Lehman Brothers
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 (simply referred to as Bank of America, often abbreviated as BofA or BoA) is an American multinational investment bank Investment is the dedication of an asset to attain an increase in value over a period o ...

Bank of America
announced it was in talks to purchase Merrill Lynch for $38.25 billion 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 is the value of an asset according to its balance sheet In financial accounting, a balance sheet (also known as statement of financial position or statement of financial condition) is a summary of the financial balances ...
of $21 a share, but a discount of 61% from its September 2007 price. Congressional testimony by Bank of America CEO
Kenneth Lewis Sir Kenneth Lewis (1 July 1916 – 2 July 1997) was a Conservative Party (UK), Conservative Party politician in the United Kingdom. He was Member of Parliament (United Kingdom), Member of Parliament of the United Kingdom for Rutland and Stamford ...
, as well as internal emails released by the
House Oversight Committee The Committee on Oversight and Reform is the main investigative committee A committee or commission is a body of one or more persons that is subordinate to a deliberative assembly. Usually, the assembly sends matters into a committee as a way t ...

House Oversight Committee
, 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., also known as AIG, is an American multinational finance and insurance corporation with operations in more than 80 countries and jurisdictions. , AIG companies employed 49,600 people.Bank of America The Bank of America Corporation (simply referred to as Bank of America, often abbreviated as BofA or BoA) is an American multinational investment bank Investment is the dedication of an asset to attain an increase in value over a period o ...

Bank of America
continued to operate Merrill Lynch for its
wealth management Wealth management (WM) or wealth management advisory (WMA) provides services to a wide array of clients ranging from affluent Wealth is the abundance of valuable financial asset A financial asset is a non-physical asset In financial accountan ...
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 Lynch, Merrill, the wealth management ...
.


Launch of Merrill Edge

On June 21, 2010, the company launched
Merrill Edge Merrill Edge is 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 financ ...
, 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 A financial intermediary is an ...
.


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 is located in the Los Angeles metropolitan area Greater Los Angeles, with a 2019 population of 18,710,563, is the second-largest urban region area in the United States The United States of America (U.S.A. or USA) ...
$400 million to settle accusations that it sold inappropriate and risky investments to former county treasurer
Robert Citron Robert Lafee Citron (April 14, 1925 – January 16, 2013) was a longtime Treasurer-Tax Collector of Orange County, California, when it declared Chapter 9, Title 11, United States Code, Chapter 9 Bankruptcy in the United States, bankruptcy on Decem ...
. 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 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, also known as the dot-com boom, the tech bubble, and the Internet bubble, was a stock market bubble Stock (also capital stock) is all of the Share (finance), shares into which ownership of a corporation is divided.Long ...
,
Henry Blodget Henry McKelvey Blodget (born 1966) is an American businessman, investor An investor is a person that allocates capital with the expectation of a future financial return (profit) or to gain an advantage (interest). Through this allocated capi ...
, 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 U.S. Securities and Exchange Commission (SEC) is a large independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929 The Wall Street Crash of 1929, also known as the Great Crash ...
. 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 In , energy is the that must be to a or to perform on the body, or to it. Energy is a ; the law of states that energy can be in form, but not created or destroyed. The unit of measuremen ...
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 which arise from intentional manipulation of financial statement Financial statements (or financial reports) are formal records of the financial activities and position of a business, person, or other ...
. 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 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 The Civil Rights Act of 1964 () is a landmark civil rights and United States labor law, labor law in the Un ...
(EEOC) brought suit against Merrill Lynch, alleging the firm discriminated against Dr. Majid Borumand because of his
Iranian Iranian may refer to: * Iran Iran ( fa, ایران ), also called Persia, and officially the Islamic Republic of Iran, is a country in Western Asia Western Asia, West Asia, or Southwest Asia, is the westernmost subregion A subreg ...
nationality and
Islam Islam (; ar, اَلْإِسْلَامُ, al-’Islām, "submission o God Oh God may refer to: * An exclamation; similar to "oh no", "oh yes", "oh my", "aw goodness", "ah gosh", "ah gawd"; see interjection An interjection is a word or ex ...
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 A self-regulatory organization (SRO) is an organization that exercises some degree of regulatory authority over an in ...
arbitration Arbitration, a form of alternative dispute resolution Alternative dispute resolution (ADR), or external dispute resolution (EDR), typically denotes a wide range of dispute resolution processes and techniques that act as a means for disag ...
panel ordered the company to pay Fariborz Zojaji, a former Iranian employee, $1.6 million 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; fa, شورای ملی ایرانیان آمریکا) is a nonprofit A nonprofit organization (NPO), also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a le ...
, and the
American-Arab Anti-Discrimination Committee The American-Arab Anti-Discrimination Committee (ADC) states that it is "the largest Arab American grassroots civil rights Civil and political rights are a class of rights that protect individuals' political freedom, freedom from infringement by ...
. On August 13, 2008, a New Jersey appeals court rendered a ruling against Merrill Lynch in a lawsuit filed by Darren Kwiatkowski, a
gay ''Gay'' is a term that primarily refers to a homosexual person or the trait of being homosexual. The term originally meant 'carefree', 'cheerful', or 'bright and showy'. While scant usage referring to male homosexuality Human male sexu ...

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, also known as a class-action lawsuit, class suit, or representative action, is a type of lawsuit A lawsuit is a proceeding by a party or parties against another in the civil Civil may refer to: *Civic virtue, or civility ...
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 Superior may refer to: *Superior (hierarchy), something which is higher in a hie ...

racism
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 which results from the absence or complete absorption Absorption may refer to: Chemistry and biology *Absorption (chemistry), diffusion of particles of gas or liquid into liquid or solid materials *Absorption (skin), a rout ...
, 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 Criminal law is the body of law Law is a system A system is a group of Interaction, inte ...
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, 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 Color (American English American English (AmE, AE, AmEng, USEng, en-US), sometimes called United States English or U.S. English, is the set of varieties of the English language native to the Unite ...
.


Market timing settlement

In March 2005, Merrill Lynch paid a $10 million civil penalty to settle allegations of improper activities at the firm's
Fort Lee, New Jersey Fort Lee is a borough A borough is an administrative division in various English language, English-speaking countries. In principle, the term ''borough'' designates a self-governing walled town, although in practice, official use of the term ...

Fort Lee, New Jersey
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 The federal government of the United States (U.S. federal government or U.S. government) is the national government of the United States The ...
, 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 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 A quasi-judicial body is a non-judicial body which can interpret law. It is an entity such as an Arbitration panel or tribunal board, that can be a public administrative agency but ...
(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 to settle charges of improper handling of pre-released
American depositary receipt An American depositary receipt (ADR, and sometimes spelled ''depository'') is a negotiable security that represents securities of a foreign company and allows that company's shares to trade in the U.S. financial markets A financial market is ...
s 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-dealerIn financial services Financial services are the economic services provided by the finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation a ...
* ''
Calibuso, et al. v. Bank of America Corp., et al. On March 30, 2010, three female employees launched a class action gender discrimination Sexism is prejudice Prejudice can be an affective feeling towards a person based on their perceived group membership. The word is often used to ref ...
'' * Credit crunch * Liquidity crisis * ''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 claims. * List of UK judgments relating to excluded subject matter * Primary dealer


References


Further reading

* * * * *


Merrill Lynch

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