Merrill Lynch has reached a global resolution with the New York Attorney General and state securities regulators to resolve issues related to sales of auction-rate securities. The firm also reached an agreement in principle with the staff of the Securities and Exchange Commission.
Under this agreement, Merrill Lynch will accelerate the plans it to purchase auction rate securities from its retail clients. Merrill Lynch individual clients, not-for-profit organization clients (including all charitable, educational and religious organizations) and small business clients who had on February 13, 2008 less than $4 million in assets at Merrill Lynch will have a 15-month period beginning on October 1, 2008 and ending on January 15, 2010 in which to sell their ARS to Merrill Lynch at par. In addition, we have agreed to move the start date to purchase ARS from other eligible clients from January 15, 2009 to January 2, 2009. Merrill Lynch’s offer to purchase ARS will remain open through January 15, 2010.
It is estimated that Merrill Lynch retail clients eligible for the October purchase currently hold an estimated $4 billion in ARS, which Merrill Lynch expects to be reduced to under $3.25 billion by October as a result of announced and anticipated issuer redemptions.
Between continuing redemptions, clearing auctions and the firm's offer, the firm estimates that approximately 90 percent of our retail clients who held ARS at Merrill Lynch in February will either have been redeemed, refinanced or will have the choice to sell their ARS to the firm by October.
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