Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Dec 6, 2011

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Merrill Lynch & Co. has agreed to settle a lawsuit over misrepresentations in the marketing of securities backed by mortgage loan pools. The settlement of $315 million covers a group of investors who purchased mortgage-backed securities between 2006 and 2007.


The misrepresentations, as asserted by the plaintiffs, included misleading appraisals, incorrect debt-to-income ratios, inflated borrower qualifications, and exaggerated credit ratings. The mortgage-backed securities sold to the plaintiffs were at first classified as valuable products, but most fell to the status of “junk” later on.


The brokerage company allegedly misrepresented $16.5 billion worth of mortgage-backed securities, but lawyers on both sides of the case urged their clients to come to an agreement. The terms negotiated came after three years of litigation and after both sides appeared to be wary of their position in the case.


“Although lead plaintiff and lead counsel believe that the claims asserted in the action are meritorious and that the class would ultimately prevail at trial, continued litigation against defendants posed significant risks that made any recovery for the class uncertain,” explained David R. Stickney, a lawyer for the plaintiffs, as reported by the Wall Street Journal.


Merrill Lynch & Co. was one of the Wall Street giants founded in the early 20th century. After suffering significant financial losses resulting from the housing market’s collapse, it was consumed by Bank of America (B of A) in 2009.


This case involved transactions between Merrill Lynch and the plaintiffs before B of A acquired Merrill Lynch.


B of A refused to admit any guilt or wrongdoing. Instead, the settlement papers attribute all losses experienced by the plaintiffs to be a result of “the overall economic downturn, housing price declines and reduced liquidity,” as reported by Business Week.


The final approval for settlement is scheduled to come on March 21, 2012.