Lindeen: Merrill Lynch to Pay $372k Fine and Buy Back $38 Million in Auction Rate Securities from Montanans

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More Montana investors who lost millions in auction-rate securities will be getting a refund.

HELENA, Mont. – Montana Commissioner of Securities and Insurance Monica Lindeen says Merrill Lynch will return more than $38 million to Montana investors.

“This settlement sends a clear message to the entire auction-rate securities industry,” said Lindeen. “This type of deceptive behavior will not be tolerated in Montana.”

The agreement announced today will settle an investigation alleging Merrill Lynch misrepresented auction rate securities to investors as safe, cash-equivalent products, even though the products faced increasing liquidity risk.

The settlement also provides that Merrill Lynch will pay a total fine of $372,977 of which will be deposited into the Montana state general fund and make a contribution of $40,000 to the Investor Protection Trust, a non-profit organization that works with the Montana Commissioner of Securities and Insurance to provide investor education and develop training materials and other objective information to help Montana consumers make informed investment decisions.

“This settlement represents a major victory for Montana investors who for months have been unable to access their funds at Merrill Lynch because those funds were placed in auction rate securities,” said Lindeen.

Lindeen’s office has recovered more than $62 million in auction-rate security settlements, including $38 million from Merrill Lynch, $9.5 million from Citigroup, $14 million from Wachovia and $550,000 from Banc of America.