TRENTON, N.J. - New Jersey Attorney General David Samson agreed yesterday to accept New York's $100 million settlement with Merrill Lynch & Co., leaving Missouri and Arizona as the only states that haven't signed on to the agreement.
The settlement, brokered in May by New York Attorney General Eliot Spitzer, calls for Merrill to pay $1.4 million to New Jersey to resolve charges that the biggest securities firm by capital misled investors with stock reports tainted by investment banking ties. The agreement requires all 50 U.S. states to agree to Spitzer's settlement before Merrill makes any payment.
"Finally, after many months of negotiating with Merrill Lynch, we have signed on to the national settlement," Samson said. The agreement allows the state to sue for pension fund damages.
Approval by Arizona and Missouri would settle the first case to allege that Wall Street research was being used to win banking business at the expense of investors who believed the recommendations were impartial. Now, 12 securities firms, including Merrill, are negotiating with state and federal regulators to settle similar charges brought subsequently. Merrill's $100 million fine is being used as a benchmark to set fines in the new probes.
Merrill said it began distributing payments to the jurisdictions that have signed onto its agreement with Spitzer.
"We have not signed on," said Spence Jackson, a spokesman for the Missouri secretary of state's office. "We are continuing to conduct our own investigation and we have requested additional information from Merrill Lynch."
Missouri regulators have objected to the settlement because it doesn't set aside money to repay aggrieved investors who say they lost money because of the firm's misleading research, Jackson said.
"We wouldn't make a decision that involves the investors of Missouri because of something the [New York] attorney general's office thinks or says," Jackson said. He said Spitzer's office has called to check on Missouri's decision, but isn't pressuring the state to make up its mind.
Arizona said it's continuing to review the settlement terms.