What is Merrill's current status within Bank of America?

Merrill is currently the investment management and wealth management division of Bank of America. It operates alongside BofA Securities, which serves as the investment banking arm.

When was Merrill Lynch, Pierce, Fenner & Smith Incorporated founded, and by whom?

The company was founded on January 6, 1914, by Charles E. Merrill. His friend, Edmund C. Lynch, joined him shortly after, and the firm was officially named Merrill, Lynch & Co. in 1915.

What was the original location of Charles E. Merrill & Co. when it first opened?

When Charles E. Merrill & Co. opened its doors, its initial location was at 7 Wall Street in New York City.

How did Merrill Lynch's name evolve over time?

The firm began as Charles E. Merrill & Co. in 1914, became Merrill, Lynch & Co. in 1915, dropped the comma in 1938, was briefly known as Merrill Lynch, E. A. Pierce, and Cassatt after a 1940 merger, became Merrill Lynch, Pierce, Fenner & Beane after a 1941 merger, and finally adopted the name Merrill Lynch, Pierce, Fenner & Smith in 1958. In 2019, Bank of America rebranded the unit to simply "Merrill."

What significant acquisition did Merrill Lynch make in 1926 that transformed a company?

In 1926, Merrill Lynch acquired a controlling interest in Safeway Inc., which was a small grocery store at the time. This acquisition helped transform Safeway into the third-largest grocery store chain in the United States by the early 1930s.

What strategic move did Charles E. Merrill make in 1930 to refocus the company?

In 1930, Charles E. Merrill led a major restructuring by spinning off the company's retail brokerage business to E. A. Pierce & Co. This allowed Merrill Lynch to concentrate its efforts on investment banking.

What technological innovation did E. A. Pierce, a firm that merged with Merrill Lynch, introduce into its business operations?

E. A. Pierce, led by figures like Edward A. Pierce, Edmund Lynch, and Winthrop Smith, was innovative in its adoption of IBM machines for its record-keeping processes.

How did Merrill Lynch become the clear leader in securities brokerage in the U.S. during the 1940s?

Merrill Lynch achieved leadership by merging with several other firms. After merging with E. A. Pierce & Co. and Cassatt & Co. in 1940, it then merged with Fenner & Beane in 1941, a significant investment bank and commodities company, creating the largest securities firm in the U.S. at that time.

What major change occurred for Merrill Lynch & Co. in 1952 regarding its corporate structure?

In 1952, Merrill Lynch & Co. formed a holding company structure and officially incorporated, transitioning from its previous status as a partnership after nearly half a century.

What was the significance of the 1964 acquisition of C. J. Devine & Co. for Merrill Lynch?

The acquisition of C. J. Devine & Co., a leading dealer in U.S. Government Securities, established Merrill Lynch's strong presence in the government securities market. This business segment provided the leverage needed to develop unique money market and government bond mutual fund products, which were crucial for the firm's growth in the 1970s and 1980s.

When did Merrill Lynch become a public company, and what allowed this transition?

Merrill Lynch became a public company through an initial public offering in June 1971. This was possible because the New York Stock Exchange had begun allowing member firms to become publicly owned a year prior.

What innovative service did Merrill Lynch introduce in 1977 that combined several financial functions?

In 1977, Merrill Lynch introduced its Cash Management Account (CMA). This account allowed customers to consolidate their cash into a money market fund and provided features like check-writing capabilities and a credit card.

How did Merrill Lynch re-enter the Canadian investment market in the late 1990s?

Merrill Lynch re-entered the Canadian investment market in June 1998 by purchasing Midland Walwyn Inc., recognizing Canada as a significant market for personal investment.

What was Merrill Lynch's stake in the Japanese animation studio TMS Entertainment in 2003?

In 2003, Merrill Lynch became the second-largest shareholder in TMS Entertainment, acquiring a 7.54% stake by purchasing 3.33 million shares. The company stated this was purely for investment purposes and not to gain control of management.

What major financial crisis led to the acquisition of Merrill Lynch by Bank of America?

The acquisition of Merrill Lynch by Bank of America in September 2008 occurred during the height of the 2008 financial crisis, specifically amidst the subprime mortgage crisis.

What was the approximate value of the acquisition of Merrill Lynch by Bank of America in 2008?

Bank of America agreed to purchase Merrill Lynch for approximately $38.25 billion in stock, which equated to about $50 billion or $29 per share at the time of the deal.

What was the impact of the 2008 financial crisis on Merrill Lynch's financial performance, leading to its sale?

Merrill Lynch experienced significant losses attributed to the declining value of its unhedged mortgage portfolio, particularly collateralized debt obligations (CDOs). This, combined with a loss of confidence in its solvency and ability to refinance money market obligations, ultimately led to its sale to Bank of America.

When did Merrill Lynch officially merge into Bank of America Corporation?

Merrill Lynch & Co. was merged into Bank of America Corporation in October 2018, although certain Bank of America subsidiaries continued to operate under the Merrill Lynch name.

What is Merrill Edge, and when was it launched?

Merrill Edge is a division of Merrill that provides electronic trading platform services and related investment and advisory options. It was launched on June 21, 2010.

When did Bank of America officially rebrand the Merrill Lynch division to "Merrill"?

Bank of America announced the rebranding of the division from "Merrill Lynch" to "Merrill" in February 2019.

What regulatory action did Merrill Lynch face in 1998 related to Orange County, California?

In 1998, Merrill Lynch paid $400 million to settle accusations by Orange County, California, that it had sold inappropriate and risky investments to the county treasurer, Robert Citron. These investments contributed to the county's bankruptcy filing.

What settlement did Merrill Lynch reach in 2002 regarding its analyst research?

In 2002, Merrill Lynch agreed to pay $100 million to settle allegations of publishing misleading research. As part of the agreement, the firm committed to improving research disclosure and separating research functions from investment banking activities.

What role did Henry Blodget play in the analyst research settlement involving Merrill Lynch?

Henry Blodget, a prominent analyst at Merrill Lynch during the dot-com bubble, was charged with civil securities fraud by the SEC in 2003 for issuing private assessments that contradicted his public research. He settled the charges, was barred from the securities industry for life, and paid a $4 million fine and disgorgement.

What was the nature of the Enron/Merrill Lynch Nigerian barge transaction in 2004?

The transaction involved a 1999 sale of Nigerian power barges by an Enron entity to Merrill Lynch. The government alleged this was a sham sale designed to allow Enron to improperly book $12 million in profit. While Merrill executives were initially convicted, their charges were later overturned on appeal.

What discrimination charges were brought against Merrill Lynch in 2007?

In 2007, the EEOC sued Merrill Lynch, alleging discrimination against an employee based on his Iranian nationality and Islamic religion. Separately, an arbitration panel ordered Merrill to pay $1.6 million to a former Iranian employee for being fired due to his ethnicity.

What was the outcome of the class action racism lawsuit settlement involving Merrill Lynch in 2013?

In August 2013, Merrill Lynch settled a class action racism lawsuit for $160 million. The suit alleged discrimination against black brokers and trainees, noting that despite a consent decree to increase their numbers, the company had a very low proportion of black brokers.

What regulatory issue led to a $10 million settlement for Merrill Lynch in March 2005 concerning market timing?

Merrill Lynch paid $10 million to settle allegations of improper market timing activities conducted by financial advisors at its Fort Lee, New Jersey office. These advisors facilitated trades for a client, Millennium Partners, in a way that siphoned short-term profits from mutual funds, harming long-term investors.

What controversial bonus payment decision did Merrill Lynch make in 2008?

Despite reporting $27 billion in losses for 2008, Merrill Lynch arranged to pay $3.6 billion in bonuses. A significant portion of this money came from funds received through the Troubled Asset Relief Program (TARP).

What action did a Merrill Lynch trader in London take in 2010 that resulted in a ban?

A Merrill Lynch trader in London was banned by the UK's Financial Services Authority (FSA) for five years after mismarking his positions by $100 million to conceal his losses. This action led to regulatory scrutiny of the firm's practices.

What did the U.S. Securities and Exchange Commission (SEC) charge Merrill Lynch with in June 2018?

The SEC charged Merrill Lynch with misleading brokerage customers about trading venues between 2008 and 2013. The company admitted wrongdoing and agreed to pay a $42 million penalty.

What settlement did Merrill Lynch reach in March 2019 concerning American depositary receipts (ADRs)?

Merrill Lynch agreed to pay over $8 million to settle charges brought by the SEC regarding the improper handling of pre-released American depositary receipts. The firm neither admitted nor denied the findings but paid disgorgement, interest, and a penalty.

What was the primary business focus of Merrill Lynch before its acquisition by Bank of America?

Merrill Lynch was known for its extensive network of financial advisors, often called the "thundering herd," which allowed it to directly place securities it underwrote. This contrasted with other firms that relied on independent brokers.

What was Merrill Lynch's historical reputation regarding its workforce composition?

Merrill Lynch was historically known as the "Catholic" firm of Wall Street, with a significant majority of its executives being Irish Catholics.

What was the stated reason for Merrill Lynch's sale to Bank of America in 2008?

The sale was driven by significant losses attributed to Merrill Lynch's large, unhedged mortgage portfolio, particularly collateralized debt obligations (CDOs). A loss of confidence in the firm's solvency and its ability to refinance money market obligations also contributed to the decision.

What was the impact of the 2008 financial crisis on Merrill Lynch's stock value prior to its sale?

Prior to its acquisition by Bank of America in September 2008, Merrill Lynch's stock price had declined significantly, falling by 61% from its September 2007 price.

What was the role of E. Stanley O'Neal at Merrill Lynch leading up to the 2008 crisis?

E. Stanley O'Neal was the chief executive of Merrill Lynch until November 2007, when he was terminated following the announcement of $8.4 billion in losses related to the subprime mortgage crisis. He had reportedly approached Wachovia for a merger without prior board approval.

Who succeeded E. Stanley O'Neal as CEO of Merrill Lynch in late 2007?

John Thain, formerly the CEO of the New York Stock Exchange, was named the new CEO of Merrill Lynch in November 2007.

What was the nature of Merrill Lynch's involvement in the Collateralized Debt Obligation (CDO) market?

Merrill Lynch became heavily involved in the CDO market in the early 2000s, becoming a leader in the market after hiring a team from Credit Suisse First Boston in 2003. To supply mortgages for these CDOs, Merrill acquired First Franklin Financial Corp., a major subprime lender, in December 2006. The firm acted as lead underwriter on numerous CDOs between 2006 and 2007.

What legal action did MBIA take against Merrill Lynch in April 2009?

MBIA, a bond insurance company, sued Merrill Lynch for fraud and five other violations. The lawsuit related to credit default swap insurance contracts MBIA had purchased from Merrill on four of Merrill's mortgage-based CDOs, alleging that Merrill had misrepresented the quality of these complex securities.

What was the core allegation in the Rabobank lawsuit against Merrill Lynch concerning the 'Norma' CDO?

Rabobank alleged that Merrill Lynch failed to disclose that a hedge fund, Magnetar Capital, had selected assets for the 'Norma' CDO with the intention of betting against them. Rabobank claimed Merrill misled them about who was selecting the assets, leading to significant losses when the CDO's value tanked.

What was the purpose of the "thundering herd" at Merrill Lynch?

The "thundering herd" referred to Merrill Lynch's network of financial advisors. This network was a key asset that allowed the firm to place securities it underwrote directly with clients, differentiating it from competitors who relied on independent brokers.

What was the significance of Merrill Lynch publishing an annual fiscal report in 1941?

By publishing an annual fiscal report in 1941, Merrill Lynch became the first firm on Wall Street to do so. This action demonstrated a commitment to transparency in its financial reporting.

How did Merrill Lynch's acquisition of White Weld & Co. in 1978 impact its business?

The acquisition of White Weld & Co., a prestigious investment bank, significantly strengthened Merrill Lynch's securities underwriting business. It bolstered the firm's capabilities in this crucial area of financial services.

What was the nature of the regulatory action against Merrill Lynch in 2018 concerning trading venues?

In 2018, the SEC charged Merrill Lynch for misleading customers about the trading venues used for their orders between 2008 and 2013. Merrill admitted wrongdoing and paid a $42 million penalty.

What was the "market timing" settlement in 2005 concerning Merrill Lynch?

Merrill Lynch paid $10 million in 2005 to settle allegations of improper market timing activities at its Fort Lee, New Jersey office. The firm failed to adequately supervise financial advisors who facilitated these trades for a client, which harmed other mutual fund investors.

What was the outcome of the criminal charges against Merrill Lynch executives related to the Enron Nigerian barge case?

Four former Merrill Lynch executives were convicted of conspiracy and fraud charges related to the Enron Nigerian barge transaction. However, their convictions were subsequently overturned on appeal by the 5th U.S. Circuit Court of Appeals, and the Justice Department decided not to retry the case.

What was the financial impact on Merrill Lynch from July 2007 to July 2008?

During that one-year period, Merrill Lynch experienced losses totaling $19.2 billion, averaging approximately $52 million per day.

What did Bank of America CEO Kenneth Lewis state regarding the pressure to acquire Merrill Lynch?

Congressional testimony and released emails indicated that Bank of America's acquisition of Merrill Lynch was conducted under pressure from federal officials. These officials reportedly suggested they would seek the replacement of Bank of America's management if the deal did not proceed.

What was the "thundering herd" at Merrill Lynch?

The "thundering herd" was a nickname for Merrill Lynch's large network of financial advisors. This network was instrumental in the firm's strategy of directly placing underwritten securities with clients.

What did Merrill Lynch do in 2003 regarding TMS Entertainment?

In 2003, Merrill Lynch became the second-largest shareholder of the Japanese animation studio TMS Entertainment by acquiring a 7.54% stake, purely for investment purposes.

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Merrill: An Overview

Corporate Identity

Merrill Lynch, Pierce, Fenner & Smith Incorporated, now operating as Merrill, is a prominent American division specializing in investment management and wealth management services. It functions as a key component of the Bank of America corporation, alongside its investment banking counterpart, BofA Securities.

Headquarters and Reach

Historically headquartered in New York City, Merrill occupied significant space at 250 Vesey Street within Brookfield Place in Manhattan. The firm's operations span globally, serving clients across numerous countries.

Financial Scale

As of recent data, Merrill employs over 14,000 financial advisors and manages substantial client assets, reportedly around $2.8 trillion, with the broader Global Wealth and Investment Management division managing $3.4 trillion.

Founding and Evolution

Genesis of an Institution

The firm's origins trace back to January 6, 1914, when Charles E. Merrill established Charles E. Merrill & Co. at 7 Wall Street. Edmund C. Lynch joined shortly thereafter, leading to the firm's renaming to Merrill, Lynch & Co. in 1915. Winthrop H. Smith joined in 1916, becoming a pivotal figure in its growth.

Strategic Mergers

The firm's trajectory involved significant strategic mergers. In 1940, Merrill Lynch merged with E. A. Pierce & Co. and Cassatt & Co., briefly operating as Merrill Lynch, E. A. Pierce, and Cassatt. A year later, it merged with Fenner & Beane, solidifying its position as Merrill Lynch, Pierce, Fenner & Beane and becoming the leading securities firm in the U.S.

Post-War Expansion

Following World War II, Merrill Lynch continued its expansion. In 1952, it restructured as a holding company, Merrill Lynch & Co., and became a public company via an IPO in 1971. The acquisition of C. J. Devine & Co. in 1964 significantly bolstered its government securities business, contributing to growth in the 1970s and 80s.

Key Services and Innovations

The "Thundering Herd"

Merrill Lynch gained renown for its extensive network of financial advisors, often called the "thundering herd." This network facilitated direct placement of securities it underwrote, a distinct strategy compared to many contemporaries who relied on independent brokers.

Financial Innovations

The firm introduced groundbreaking products, such as the Cash Management Account (CMA) in 1977, which integrated money market funds, check-writing, and credit card features. This innovation significantly impacted how individuals managed their finances.

Digital Presence

In 2010, Merrill launched Merrill Edge, an electronic trading platform designed for investment and related services, expanding its reach into the digital brokerage space and offering call center consultancy.

Acquisition by Bank of America

The 2008 Financial Crisis

During the 2008 financial crisis, Merrill Lynch faced significant challenges, including substantial losses from subprime mortgage-related assets. The firm announced write-downs and leadership changes, with John Thain succeeding E. Stanley O'Neal as CEO in late 2007.

A Transformative Deal

On September 14, 2008, amidst the crisis, Bank of America announced its agreement to acquire Merrill Lynch for approximately $38.25 billion in stock. The acquisition was completed in January 2009, integrating Merrill Lynch into the Bank of America corporate structure.

Rebranding and Integration

In 2019, Bank of America officially rebranded the division to "Merrill," simplifying its identity while continuing to leverage the established brand equity. Merrill's investment banking operations were integrated into BofA Securities.

Navigating the Crisis

Subprime Mortgage Exposure

Merrill Lynch incurred significant losses, estimated at $51.8 billion, due to its substantial holdings in mortgage-backed securities and collateralized debt obligations (CDOs) amidst the subprime mortgage crisis. This exposure led to major write-downs and a severe impact on the firm's financial stability.

Regulatory Scrutiny

The firm faced intense regulatory scrutiny, including threats of lawsuits from the New York Attorney General over alleged misrepresentation of risk in mortgage-backed securities. Merrill also engaged in buybacks of auction-rate securities and sold off assets to raise capital.

CDO Market Involvement

Merrill's deep involvement in the collateralized debt obligation (CDO) market, including the acquisition of subprime lender First Franklin Financial Corp., positioned it heavily within the crisis. The subsequent collapse in CDO values resulted in billions of dollars in losses for the company.

Regulatory Actions and Settlements

Financial Misconduct Settlements

Merrill Lynch has been involved in numerous settlements related to financial misconduct. These include a $400 million settlement with Orange County, California, over allegations of selling inappropriate investments, and a $100 million settlement in 2002 for publishing misleading research.

Analyst and Trading Issues

The firm faced charges concerning analyst Henry Blodget's conflicting public and private assessments during the dot-com bubble, leading to his bar from the securities industry. A trader in London was also banned for mismarking positions by $100 million.

Discrimination and Trading Venue Cases

Merrill Lynch settled a class-action racism lawsuit for $160 million. It also faced charges from the SEC for misleading customers about trading venues, resulting in a $42 million penalty, and paid over $8 million for improper handling of American depositary receipts.

Brand Evolution

From Merrill Lynch to Merrill

In February 2019, Bank of America announced a significant rebranding initiative, transitioning the division from "Merrill Lynch" to simply "Merrill." This move aimed to streamline the brand identity and emphasize its integration within the broader Bank of America ecosystem.

Continued Market Presence

Despite the rebranding and the challenges faced during the 2008 crisis, Merrill continues to operate as a major player in wealth and investment management, maintaining its legacy of client service and financial expertise under the Bank of America umbrella.

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References

Jan 2009 â see Crash of the Titans by Greg Farrell

"Revising a Sonorous Piece of Americana: Merrill Lynch, Pierce, Fenner and Smith." The New York Times, December 31, 1957, p. 29

A full list of references for this article are available at the Merrill (company) Wikipedia page

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This page was generated by an Artificial Intelligence and is intended for informational and educational purposes only. The content is based on a snapshot of publicly available data from Wikipedia and may not be entirely accurate, complete, or up-to-date.

This is not financial advice. The information provided on this website is not a substitute for professional financial consultation, investment advice, or planning. Always seek the advice of a qualified financial advisor or professional with any questions you may have regarding your financial situation or investment decisions. Never disregard professional financial advice or delay in seeking it because of something you have read on this website.

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Merrill: Pillars of Finance

💡 Dive in with Flashcard Learning! 💡

Merrill: An Overview 🏦

🏢 Corporate Identity

📍 Headquarters and Reach

💰 Financial Scale

Founding and Evolution 📜

🌱 Genesis of an Institution

🤝 Strategic Mergers

📈 Post-War Expansion

Key Services and Innovations 💼

🔗 The "Thundering Herd"

💡 Financial Innovations

💻 Digital Presence

Acquisition by Bank of America 🤝

📉 The 2008 Financial Crisis

🏦 A Transformative Deal

🏷️ Rebranding and Integration

Navigating the Crisis 📉

🔥 Subprime Mortgage Exposure

⚖️ Regulatory Scrutiny

🎲 CDO Market Involvement

Regulatory Actions and Settlements ⚖️

💸 Financial Misconduct Settlements

🗣️ Analyst and Trading Issues

⚖️ Discrimination and Trading Venue Cases

Brand Evolution 🏷️

🔄 From Merrill Lynch to Merrill

🌐 Continued Market Presence

Teacher's Corner 🧑‍🏫

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References

📜 References

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Disclaimer ⚠️

📜 Important Notice

Dive in with Flashcard Learning!

Merrill: An Overview

Corporate Identity

Headquarters and Reach

Financial Scale

Founding and Evolution

Genesis of an Institution

Strategic Mergers

Post-War Expansion

Key Services and Innovations

The "Thundering Herd"

Financial Innovations

Digital Presence

Acquisition by Bank of America

The 2008 Financial Crisis

A Transformative Deal

Rebranding and Integration

Navigating the Crisis

Subprime Mortgage Exposure

Regulatory Scrutiny

CDO Market Involvement

Regulatory Actions and Settlements

Financial Misconduct Settlements

Analyst and Trading Issues

Discrimination and Trading Venue Cases

Brand Evolution

From Merrill Lynch to Merrill

Continued Market Presence

Teacher's Corner

True or False?

Test Your Knowledge!

Gamer's Corner

Discover other topics to study!

References

Feedback & Support

Disclaimer

Important Notice