Merrill Lynch has struck an agreement with Colorado securities regulators to buy back $256 million worth of auction-rate securities from investors in the state who suddenly couldn’t access their funds after markets froze last year.
Last year, Colorado and several states received complaints from investors who said the firm misled them by assuring them the securities were safe and liquid, triggering investigations, according to Colorado Securities Commissioner Fred Joseph.
Nationally, Merrill Lynch will buy back more than $26 billion of the securities as a result of the inquiries.
“This settlement represents a major victory for investors,” Joseph said.
Through the auction-rate securities market, investors bought instruments whose interest rates were routinely changed — sometimes every week or two — at auctions. The number of investors affected was not available. Investigations are continuing into possible misconduct by other firms. Securities officials said this agreement is one of the largest buyback settlements of its kind in Colorado.
Last month, regulators announced that Wachovia Securities had agreed to buy back $157 million in securities from state investors as part of a $13 billion nationwide deal.
