A news release from Comptroller Thomas P. DiNapoli said the settlement also included Morgan Stanley executives E. Stanley O’Neal and Jeffrey N. Edwards.
DiNapoli’s office alleged that the defendants tried to cover up the extent of the company’s involvement in risky subprime mortgage-backed securities, which artificially inflated the value of the company stock. When the true extent of their exposure became public, the stock value plummeted and investors lost money, DiNapoli alleged.
“The fund was misled about the extent of Merrill Lynch’s participation in the subprime mortgage fiasco; that is unacceptable,” said State Comptroller Thomas P. DiNapoli, trustee of the $132.8-billion fund. “I am confident that this settlement makes up for a large part of the fund’s losses. This sends a message that we will always fight to protect the best interests of our members.”
In addition to the suit involved in the settlement, the fund filed a separate but related action seeking to recover losses incurred as the result of the merger between Bank of America and Merrill Lynch (see NY State Fund Sues BofA, Merrill ).
« Study Chronicles Pressures on Plan Sponsors