Colling, Gilbert, Wright & Carter Securites Fraud

According to an August 7, 2008 Bloomberg.com article, financial services giant Merrill Lynch & Co. said it will offer to buy back approximately $10 billion in auction-rate securities(ARS) from retail clients after Citigroup Inc. agreed to take similar steps under a settlement with U.S. and state regulators.

ML said it will pay face value for the securities and the repurchases will begin in January and continue for approximately a year. The investments have been frozen in customer accounts since Wall Street firms backed away from the market in February, leading to legal claims by customers and investigations by the U.S. Securities and Exchange Commission as well as regulators in New York and Massachusetts.

Regulators have been investigating how banks and Wall Street firms marketed and sold auction-rate securities before the ARS market collapsed earlier this year. Citigroup, the biggest U.S. bank by assets, earlier today announced it had reached a tentative agreement with the State of New York and North American Securities Administrators Association (NASAA) regulators to buy back approximately $7 billion in ARS's from its brokerage clients.

Merrill extended its offer to individual investors, charities and small businesses. The firm said it doesn't expect purchases during the buyback period to have ``a materially adverse impact on its capital ratios, liquidity or consolidated financial performance.''

The firm must still resolve pending regulatory complaints. Massachusetts Secretary of the Commonwealth William Galvin said in a telephone interview that Merrill's redemption timeline is ``not satisfactory.''

While other state regulators view today's announcement is a positive step, some are not convinced this will solve investor liquidity problems. New York Attorney General Andrew Cuomo, who announced the Citigroup agreement at a press conference today in New York, said in a statement his office was evaluating Merrill's offer.

Merrill says clients currently hold about $12 billion of auction-rate securities, and that number will be reduced to $10 billion by January through the announced redemptions.

Auction-rate securities are bonds or preferred shares whose interest rates are reset by periodic bidding run by dealers. Firms including Citigroup, UBS, Wachovia, Bank of America, Morgan Stanley and Merrill Lynch abandoned their routine role as buyers of last resort for the debt in mid-February as demand dried up, allowing the market to collapse and leaving investors without access to their funds that were placed in what had been presented to them as liquid, money-market-like instruments.

Please contact our office for information on how these recent developments may affect your losses in auction rate securities, or mutual fund losses stemming from undisclosed subprime exposure. See our info regarding potential loss recovery in RMK Morgan Keegan Funds, Evergreen Ultra-Short Opportunity Fund and Schwab YieldPlus Fund.