Securities News Releases

Thursday, October 22, 2009
Contact: Laura Egerdal, (573) 526-0949
Contact: Abe Rakov, (573) 526-4734

Carnahan Joins 7-State Task Force and Reaches Agreement with Merrill Lynch

Jefferson City, MO - Secretary of State Robin Carnahan today announced that Merrill Lynch, Pierce, Fenner & Smith Inc. will pay $367,500 to the Missouri Investor Education and Protection Fund after a multi-state investigation found the firm’s agent registration practices failed to comply with state law.

Under Missouri securities law, all brokers and client assistants that conduct business in the state must register with the Securities Division, even if they are not based in Missouri. This requirement helps to protect investors from unqualified brokers and ensures they can check broker qualifications by calling the Investor Protection Hotline (1-800-721-7996).

In May 2008, Merrill Lynch's registration and supervision of their client associates was called into question by a tip from a former Merrill Lynch employee, who alleged the firm was failing to ensure that its associates were properly registered in each state where they were doing business.

"Missouri investors deserve to know their savings are being handled by qualified and properly registered brokers," Carnahan said. "I am pleased we were able to partner with other states to shine light on this practice."

The order states that Merrill Lynch violated Missouri securities law by allowing unregistered associates to sell securities. Although some client associates were properly registered in their home state as well as a neighboring state, many were accepting trade orders from clients in states in which the associates were not registered.

Merrill Lynch has agreed to pay more than $26.5 million in fines, penalties and other monetary sanctions and payments among the 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands, with $367,500 going to the Missouri Investor Education and Protection Fund. Other states involved in the multi-state investigation included Arizona, Colorado, Delaware, New Hampshire, Texas and Vermont.

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To find out more about Missouri's Secretary of State's office, visit www.sos.mo.gov

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