Merrill Lynch Strikes $132M Pact With SEC Over CDO Claims

Law360, New York (December 12, 2013, 3:11 PM EST) -- Merrill Lynch has agreed to pay $131.8 million to settle claims it publicly touted two collateralized debt obligations without disclosing that a hedge fund had helped to craft the complex securities while betting they would fail, the U.S. Securities and Exchange Commission said Thursday.

Merrill Lynch reached the settlement without admitting or denying wrongdoing. According to the SEC, the firm failed to tell investors in two CDOs that hedge fund Magnetar Capital LLC played a major role in selecting the underlying collateral. Magnetar bought the equity...
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