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Merrill Settles Suits Over Losses on Securities Trades

August 28, 1990|From Associated Press

NEW YORK — Merrill Lynch & Co. and its insurers have settled a set of claims stemming from $250 million in losses from trading mortgage-backed securities announced in April, 1987, officials said Monday.

Merrill also agreed to release more than $1 million in compensation plus interest previously withheld from Howard A. Rubin, a senior trader that Merrill had blamed for a substantial portion of the losses.

Merrill spokeswoman Monica Prihoda said Merrill had received $17.5 million from insurance companies that provide its directors and officers with liability coverage to settle various lawsuits brought by shareholders for the firm.

Merrill had dismissed Rubin after the losses occurred and said it had given the Securities and Exchange Commission information relating to allegedly unauthorized trading.

Rubin earlier this year settled SEC charges without admitting or denying guilt that he had aided and abetted a record-keeping violation in connection with the trades.

"It is worth noting that these lawsuits are being settled without him paying anything and, indeed, with Merrill paying him," said George Yankwitt, an attorney for Rubin.

Prihoda declined to comment on details of the settlement with Rubin as cited by Yankwitt.

The lawsuits against the firm had maintained that the losses were caused by Rubin and that his superiors had failed to supervise his activities.

"The settlement with Mr. Rubin was to resolve prior contractual claims unrelated to the trading loss," Prihoda said.

She also said Merrill believes that all shareholder allegations about who was to blame for the trading losses are without merit, "except those relating to the conduct of Howard Rubin."

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