December 1, 2008 – Crosby & Higgins LLP files $65 Million Auction Rate Preferred Securities Arbitration Against Merrill Lynch & Co.
December 1, 2008
Crosby & Higgins LLP has filed a $65 million dollar arbitration with the Financial Industry Regulatory Dispute Resolution Corp.(FINRA-DR) on behalf of an institutional client against Merrill Lynch & Co. Inc. arising out of thepurchase of auction rate preferred securities deceptively marketed as safe, cash equivalent, liquid investments, despite Merrill Lynch’s knowledge of the true condition of the auction market and these securities. According to state regulators, Merrill Lynch allegedly knew of the mounting problems with the auction rate securities market as early as August of 2007, yet chose to suppress this information even as it aggressively sought to unload its own holdings on to its customers. In this arbitration, Merrill Lynch dramatically increased the client’s ARS holdings from zero in August of 2007, to over $100 million at the end of January 2008. Despite recently entering into global settlements with state regulators to redeem these securities from individual investors, Merrill Lynch & Co. Inc. continues to refuse to do so with respect to large corporate and institutional investors, who are left holding billions in illiquid securities for which no viable secondary market exists. The arbitration claim filed by Crosby & Higgins LLP in the Midwest Regional Office of FINRA-DR seeks at least $65 million in compensatory damages as well as consequential and punitive damages and attorneys’ fees.