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Friday, August 15, 2008
New York Attorney General Cuomo to Sue Merrill Lynch
FOXBusiness
In the latest development in New York Attorney General Andrew Cuomo’s investigation into the auction-rate securities market, his office will soon take legal action against Merrill Lynch (MER).
The lawsuit is the latest development of an industrywide investigation of banks that mishandled risky debt. Cuomo’s plan to take legal action was announced shortly after the details of an agreement the office had made with Wachovia (WB) were released.
Wachovia has agreed to buy back more than $8.5 billion in auction-rate securities by November 28. The company will also pay $50 million in civil penalties
Four other banks have already reached settlements with the Attorney General and the Security and Exchange Commission, including UBS AG, Citigroup, Morgan Stanley, and JPMorgan Chase.
FOX Translator
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If you've seen TV footage of an active trading pit, you've probably noticed the atmosphere is uproarious and wild. The reason for all the shouting? Open outcry.
On exchange floors that use the open-outcry system, traders shout prices they want to sell while others yell back the price they want to buy at. They also use hand gestures to communicate with each other.
This system has been used for a long time, but is being replaced with modern technology. Some argue electronic exchanges can do the job faster and more accurately. One of the few exchanges that continue to use open outcry is the New York Mercantile Exchange.
