WASHINGTON–Merrill Lynch has agreed to pay US$131.8 million to settle US civil charges that it misled investors about risky mortgage bonds it sold ahead of the 2008 financial crisis.The Securities and Exchange Commission (SEC) announced the settlement yesterday. Merrill Lynch was accused of using misleading materials to market the investments in 2006 and 2007.The materials gave investors a false impression that the collateral for the securities was chosen by an independent firm, the SEC said.
Merrill neither admitted nor denied the allegations. But it did agree to refrain from future violations of the securities laws.The SEC also censured Merrill, bringing the possibility of a stiffer sanction if the alleged violation is repeated.When the housing bubble burst in 2007, millions of home borrowers defaulted on their loans and bundles of mortgages sold by big banks left investors with billions in losses.
AP