Regulators in the US state of Massachusetts have charged that Merrill Lynch acted unethically by fraudulently selling auction-rate securities and misleading investors, the Boston Globe reports.
The charges claim that Merrill Lynch violated the supposed independence of its research department to help sell the securities and buried other negative information about them.
“Our research reflected the honest belief that [auction-rate securities] offered higher returns in exchange for less liquidity and noted that market changes had begun to occur,” Merrill said in a statement.