SEC says in preliminary ARS settlement with Merrill

BOSTON (MarketWatch) — The Securities and Exchange Commission on Friday afternoon said it has reached a preliminary settlement in principle with Merrill Lynch & Co. over the sale of troubled auction-rate securities. Under the agreement, Merrill would let investors who purchased auction-rate securities from the company receive a total of up to $7 billion to restore their losses and liquidity, the agency said. The preliminary settlement also would require Merrill Lynch to use its “best efforts to provide liquidity for approximately $1.5 billion worth of ARS purchased through Merrill Lynch by other business and institutional customers,” the SEC said in a statement. “The proposed charges involve alleged misrepresentations by Merrill Lynch to thousands of its customers that ARS were safe, highly liquid investments equivalent to money market instruments and cash.”
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