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News Release: 02-05
GRAY DAVIS, Governor
Date: 05/21/02
DEMETRIOS A. BOUTRIS, Commissioner
California Participates in Merrill Settlement
Sacramento, May 21, 2002 — The California Department of Corporations congratulated New York Attorney General Eliot Spitzer for concluding a settlement agreement with Merrill Lynch regarding the conflicts of interest between Merrill's research and banking divisions. As a result of the settlement, California will share in a $100 million settlement with New York and other states.
"A large measure of fairness for the individual investor has been restored to the financial services marketplace as a result of the efforts of Attorney General Spitzer," said California Corporations Commissioner Demetrios A. Boutris. "Our own investigation into Merrill's retail brokerages showed that California investors were being sold certain stocks that were touted in public by Merrill's analysts even as the same analysts were trashing the stocks in internal emails. The Department of Corporations looks forward to determining whether other securities firms were engaged in similar behavior."
California, along with New York and New Jersey, is co-chairing a North American Securities Administrators Association (NASAA) task force investigating conflicts of interest at other major brokerages.
The Department of Corporations is California's Investment and Financing Authority, reporting to the Business, Transportation and Housing Agency and the Governor. The Department is responsible for the regulation, enforcement and licensing of securities, franchises, off-exchange commodities, investment and financial services, independent escrows, consumer and commercial finance lending and residential mortgage lending. For further information or to obtain a complaint form, see the Department's Web site at www.corp.ca.gov or call 1-866-ASK-CORP (1-866-275-2677).
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