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October 26, 1995| Times Staff and Wire Reports

Muni Bond Fraud Settlement Expected: Merrill Lynch & Co. and Lazard Freres & Co. are close to a settlement with regulators over allegations of conflicts of interest and fraud in municipal bond underwritings in Massachusetts, people familiar with the agreement said. Merrill, the biggest U.S. securities firm, and Lazard, one of the most lucrative investment banking partnerships, will pay a total of about $20 million to settle civil charges that they violated federal fraud statutes, they said. Merrill and Lazard will settle the charges with the Securities and Exchange Commission and Massachusetts regulators without admitting or denying guilt, they said. Both New York-based firms were accused of maintaining a secret fee-sharing arrangement. Massachusetts officials have alleged that the pact between Mark Ferber, a former Lazard partner, and Merrill helped the firms expand their municipal bond businesses, while costing Massachusetts millions of dollars in inflated fees and above-market interest rates.

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