Merrill Lynch

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Merrill
Division
IndustryFinancial services
FoundedJanuary 6, 1914; 105 years ago (1914-01-06)
FounderCharles E. Merrill
Headquarters250 Vesey Street
New York City, New York, U.S.
Area served
Worldwide
ServicesInvestment management
RevenueUS$13.8 billion (2012)[1]
Number of employees
15,100 (Financial Advisors as of 2010)
ParentBank of America
Divisions
  • Merrill Lynch Wealth Management
  • Merrill Private Wealth Management
  • Merrill Guided Investing
  • Merrill Edge
Websitewww.ml.com

Merrill, previously Merrill Lynch, is an American investing and wealth management division under the auspices of Bank of America. Along with BofA Securities, the investment banking arm, both firms engage in prime brokerage and security dealings. The firm is headquartered in New York City, and occupies the entire 34 stories of 250 Vesey Street, part of the Brookfield Place complex, in Manhattan. Merrill employs over 15,000 financial advisors and manages $2.2 trillion in client assets.[2]

The firm has its origins in Merrill Lynch & Co., Inc. which, prior to 2009, was publicly owned and traded on the New York Stock Exchange under the ticker symbol MER. Merrill Lynch & Co. agreed to be acquired by Bank of America on September 14, 2008, at the height of the 2008 Financial Crisis.[3] The acquisition was completed in January 2009[4] and Merrill Lynch & Co., Inc. was merged into Bank of America Corporation in October 2013, with certain Bank of America subsidiaries continuing to carry the Merrill Lynch name, including the broker-dealer Merrill Lynch, Pierce, Fenner & Smith.[5][6] In 2019, Bank of America rebranded the unit to "Merrill".[7]

History[edit]

Merrill Lynch logo before the rebranding in February 2019

Sale to Bank of America[edit]

Significant losses were attributed to the drop in value of its large and unhedged mortgage portfolio in the form of collateralized debt obligations. Trading partners' loss of confidence in Merrill Lynch's solvency and ability to refinance short-term debt ultimately led to its sale.[8][9] During the week of September 8, 2008, Lehman Brothers came under severe liquidity pressures, with its survival in question. If Lehman Brothers failed, investors were afraid that the contagion could spread to the other surviving investment banks. On Sunday, September 14, 2008, Bank of America announced it was in talks to purchase Merrill Lynch for $38.25 billion in stock.[10] The Wall Street Journal reported later that day that Merrill Lynch was sold to Bank of America for 0.8595 share of Bank of America common stock for each Merrill Lynch common share, or about US$50 billion or $29 per share.[11] This price represented a 70.1% premium over the September 12 closing price or a 38% premium over Merrill's book value of $21 a share,[12] but that also meant a discount of 61% from its September 2007 price.[13]

Congressional testimony by Bank of America CEO Kenneth Lewis, as well as internal emails released by the House Oversight Committee, indicate that the merger was transacted under pressure from federal officials, who said that they would otherwise seek the replacement of Bank of America's management as a condition of any government assistance.[14][15][16] In March 2009 it was reported that in 2008, Merrill Lynch received billions of dollars from its insurance arrangements with AIG, including $6.8 billion from funds provided by the United States taxpayers to bail out AIG.[17][18]

Rebranding[edit]

In February 2019, Bank of America announced the division was to be rebranded from "Merrill Lynch" to "Merrill."[19]

Merrill Edge[edit]

Merrill Edge is a discount brokerage service provided by Merrill.[20] The online service was launched on 21 June 2010.[21][22][23] The service was expected to compete with similar firms such as Charles Schwab Corporation and E*Trade. Before the launching of this service, Merrill Lynch worked with clients who had over $250,000 of liquid assets. This service was designed to allow a wider demographic to invest with Bank of America. According to the website, the service offers "the investments insights of Merrill Lynch plus the convenience of Bank of America banking". Other competitors listed are Ameritrade and Fidelity Investments.

Controversies[edit]

On 19 June 2018, The U.S. Securities and Exchange Commission (SEC) charged Merrill Lynch of misleading brokerage customers about trading venues between 2008-2013. Merrill Lynch admitted wrongdoing and agreed to pay a $42 million penalty.[24][25]

On 22 March 2019, Merrill Lynch agreed to pay more than $8 million to settle charges of improper handling of "pre-released" American depositary receipts (ADRs) under investigation of the U.S. Securities and Exchange Commission. Merrill Lynch didn't admit or deny the investigation findings but agreed to pay disgorgement of more than $4.4 million in ill-gotten gains plus $724,000 in prejudgment interest and an additional penalty of $2.89 million.[26][27]

See also[edit]

References[edit]

  1. ^ "Bank of America Corporation Annual Report 2012" (PDF). Bank of America Corporation. Retrieved December 22, 2013.
  2. ^ "About Merrill Lynch". ML.com. Retrieved July 11, 2011.
  3. ^ Sep 2008, the same weekend that Lehman Brothers was allowed to fail.
  4. ^ Jan 2009 – see Crash of the Titans by Greg Farrell
  5. ^ "Bank of America Finishes Merger of Merrill Lynch Into Parent". Bloomberg. January 21, 2013. Retrieved October 1, 2013.
  6. ^ "Bank of America Simplifies Corporate Structure". Bank of America Corporation. Archived from the original on December 24, 2013. Retrieved December 21, 2013.
  7. ^ Back, Aaron (February 25, 2019). "Merrill: What's in a Name?". Wall Street Journal. ISSN 0099-9660. Retrieved February 25, 2019.
  8. ^ Morgenson, Gretchen (November 8, 2008). "The Reckoning: How the Thundering Herd Faltered and Fell". The New York Times. Retrieved November 13, 2008. Some banks were so concerned that they considered stopping trading with Merrill if Lehman went under, according to participants in the Federal Reserve's weekend meetings on Sept. 13 and 14 [2008]
  9. ^ Paulden, Pierre (August 26, 2008). "Merrill, Wachovia Hit With Record Refinancing Bill (Update1)". Bloomberg News. Archived from the original on November 16, 2008. Retrieved November 12, 2008. In response to a slump in demand for their bonds, financial firms, which have incurred $504 billion of writedowns and credit losses since the start of 2007, are selling assets such as mortgage securities and collateralized debt obligations at fire-sale prices to pay down looming maturities
  10. ^ Andrew Ross Sorkin (September 14, 2008). "Bank of America in Talks to Buy Merrill Lynch". The New York Times.
  11. ^ Matthew Karnitschnig; Carrick Mollenkamp; Dan Fitzpatrick (September 14, 2008). "Bank of America Reaches Deal for Merrill". The Wall Street Journal.
  12. ^ "They All Fall Down". Archived from the original on September 16, 2008. Retrieved September 16, 2008.
  13. ^ Rusli, Evelyn (September 15, 2008). "The Universal Appeal of BofA". Forbes.
  14. ^ LOUISE STORY & JO BECKER (June 11, 2009). "Bank Chief Tells of U.S. Pressure to Buy Merrill Lynch". The New York Times. Retrieved June 13, 2009.
  15. ^ Scott Lanman & Craig Torres (June 10, 2009). "Republican Staff Says Fed Overstepped on Merrill Deal (Update1)". Bloomberg. Retrieved June 13, 2009.
  16. ^ Barbara Barrett (June 10, 2009). "BofA documents, e-mails show pressure to buy Merrill Lynch". The Miami Herald. Retrieved June 13, 2009.[dead link]
  17. ^ Eamon Javers, "AIG ships billions in bailout abroad", Politico, March 15, 2009
  18. ^ "A.I.G. Lists Firms It Paid With Taxpayer Money". The New York Times. March 15, 2009.
  19. ^ Ensign, Rachel Louise (February 25, 2019). "Bank of America to Drop Merrill Lynch Name From Some Businesses". Wall Street Journal. ISSN 0099-9660. Retrieved February 25, 2019.
  20. ^ "Merrill Edge Official Website". Retrieved March 16, 2015.
  21. ^ "Bank of America Launches New 'Merrill Edge' Online Investing Tool". MyBankTracker. May 2, 2011. Retrieved March 15, 2015.
  22. ^ Veneziani, Vince (June 17, 2010). "Merrill Lynch Launching Online Discount Brokerage Next Monday". Business Insider. Retrieved March 15, 2015.
  23. ^ Southall, Brooke (June 20, 2010). "Why the launch of Merrill Edge may be a shrewder move by BoA than it first appears". RIA Biz. Retrieved March 15, 2015.
  24. ^ "Merrill Lynch Admits to Misleading Customers about Trading Venues". www.sec.gov. Retrieved March 23, 2019.
  25. ^ "Merrill Fined $42 Million for Hiding Where It Sent Client Orders". Bloomberg.com. June 19, 2018. Retrieved March 23, 2019.
  26. ^ "Merrill Lynch to Pay Over $8 Million for Improper Handling of ADRs". www.sec.gov. Retrieved March 23, 2019.
  27. ^ "U.S. SEC says Bank of America Merrill Lynch to pay $8 million ADR". Reuters. March 22, 2019. Retrieved March 23, 2019.

Further reading[edit]

External links[edit]