NEW YORK (Reuters) - The top securities regulator in Massachusetts on Friday said he filed a civil complaint against Merrill Lynch & Co Inc MER.N, accusing the brokerage of selling unsuitable subprime mortgage-related securities to the city of Springfield.
Merrill Lynch was not immediately available for comment.
Massachusetts Secretary William Galvin said he is seeking to take away Merrill’s profits from a transaction in which it sold collateralized debt obligations to Springfield, Massachusetts.
Merrill invested about $14 million of the city’s money in CDOs last year, only to see most of their value erased. CDOs underpinned by subprime mortgages soured amid rising loan defaults and falling home prices.
Separately, the city of Springfield said on Thursday Merrill agreed to pay it $13.9 million after determining the city had not approved the purchase of the CDOs.
Reporting by Tim McLaughlin, editing by Gerald E. McCormick, Leslie Gevirtz