SCC Accepts Merrill Lynch Settlement; $1.2 Million Paid To Virginia

11/27/2002

From: Ken Schrad of the Virginia State Corporation Commission, 804-371-9141; E-mail: kschrad@scc.state.va.us Web site: http://www.state.va.us/scc

RICHMOND, Nov. 27 -- The State Corporation Commission (SCC) has accepted the terms of a settlement involving securities broker Merrill Lynch. Virginia joins 47 other states, the District of Columbia, and Puerto Rico to agree to a settlement of a securities investigation led by the state of New York.

Merrill Lynch, the nation's largest securities firm, agreed to pay $100 million as part of a national settlement negotiated earlier this year by the New York state attorney general and the North American Securities Administrators Association.

Although there has been no admission to any violation of law, the investigation alleged that investment advice by the firm's analysts was tainted by conflicts of interest. The conflict may have caused the firm's research analysts to mislead investors when recommending a particular stock.

Virginia's portion of the settlement is $1,179,237. Of that amount, the SCC's Division of Securities and Retail Franchising intends to use $179,237 to enhance the division's investor education program. The program provides information about investor's rights, consumer protections, and tips on avoiding stock fraud. The remaining $1 million will be transferred to the state treasurer for deposit in the general fund of the Commonwealth.

SCC Securities Division Director Ronald W. Thomas says, "This settlement strengthens investor confidence and ensures that Virginians will continue receiving information they need to make wise investment choices."

Case number SEC-2002-00028