Massachusetts Murmurs about Merrill Lynch and Financial Misdeeds
.
Springfield, MAThe state of Massachusetts has some murmuring going on in the upper echelon of its security regulation ranks. Merrill Lynch is being allegedly blamed for swindling Springfield city in relation to investments of a subprime stylized nature. With the real estate market on the down slide, alleged financial misdeeds and investment offerings are coming to the forefront of Wall Street.
The Secretary of State in Massachusetts, William Galvin, allegedly initiated a civil fraud allegation in opposition to Merrill Lynch. This happened one day after Merrill Lynch supposedly offered to refund money lost on investments by the city of Sprinfield, MA. The alleged amount Merrill Lynch offered was $13.9 million, which was the initial worth of the securities. Brokers of Merrill Lynch had allegedly not received permission from the city of Springfield to purchase the investments for the city.
Consequently, Springfield is allegedly not the only city in Massachusetts that is reviewing the practices of the giant investment firm. Many other areas of the state are launching investigations into the matter. This is due to the severity involved in allegedly committing fraud against a city. Many city and state officials are shocked and dismayed by the situation.
Several experts are beginning to mull over the prospect that Wall Street is allegedly an impetus behind the declining real estate market and mortgage problem. While the real estate market was on the upswing, many professionals in the investment sector loaded billions of dollars of mortgage loans into bundled investments. Now all avenue of the banking industry are feeling the pinch and are reeling from major financial losses due to the real estate halt. Merrill Lynch allegedly is in the category with its colleagues racking up $25 billion in mortgage stylized security investments.
The alleged offering of Merrill Lynch is a rare situation. Most banks fear offering refunds when investments go South. This is because everyone will begin to expect refunds for their losses as well. The alleged incident with Springfield, MA was due to the questionability of the sales strategies and tactics used for the city.
Springfield, MA allegedly amassed losses in the Merrill Lynch securities of $12.7 million. The purchase price was $13.9 million at the close of 2007 the value dropped to $1.2 million. The city believed it had not received fair warning of the risk factor of the investments.
However, allegedly Merrill Lynch says that they were under no legal obligation to the city. They are allegedly not responsible for the outcomes of the investments. The two brokers involved in the alleged incident were investing the money in the way they believed best for the city. Both sides seem to have their own opinion on how the matter has been handled. Now it will be up to state regulators in Massachusetts to determine what they believe to be the case for other cities throughout the state pertaining to the investments allegedly mishandled by Merrill Lynch. This comes at a time when many questions are on the minds of investors everywhere about how safe are their investments in the hands of others?