Investors will be watching shares of Merrill Lynch & Co. Friday, after the investment bank late Thursday settled with regulators over its role in selling risky auction-rate securities to retail investors.
Merrill Lynch Chief Executive John Thain said Thursday the New York-based brokerage, which last week agreed to repurchase the debt on a voluntary basis, would "accelerate the plans" by buying back $10 billion to $12 billion of the securities from investors by Jan. 2 and pay a fine of $125 million.
New York Attorney General Andrew Cuomo, leading the investigation on behalf of state and federal authorities, has now reached deals to buy back more than $50 billion worth of auction-rate securities from eight global banks.
In a research note to clients Friday morning, Keefe Bruyette & Woods analyst Lauren Smith wrote, "We believe that the settlement should alleviate some of the negative overhang on the stock as the uncertainty surrounding the potential downside to the auction-rate securities issue appears to behind the firm."
Merrill Lynch shares closed at $24.34 Thursday.