Maui County Settles Dispute with Merrill Lynch Over Student Auction Rate Securities
News Release from County of Maui
WAILUKU, Maui, Hawaii – Mayor Alan Arakawa is pleased to announce that the County of Maui has reached a resolution regarding the purchase of $32 million in student loan auction rate securities from Merrill Lynch.
As part of the agreement with Corporation Counsel and Merrill Lynch, Pierce, Fenner & Smith Inc, Merrill Lynch has agreed to buy back the County’s full investment. The issue has been ongoing ever since the County filed claims against Merrill Lynch with the Financial Industry Regulatory Authority (FINRA) along with a lawsuit against Merrill Lynch in federal court in February 2010.
“This resolution means the County can reinvest these funds short-term and later use them for our Capital Improvement Projects,” said Mayor Arakawa. “This is all thanks to the hard work of Corporation Counsel Pat Wong along with support from Finance Director Danny Agsalog.
“We have a good team here and I’m proud of their work regarding this matter.”
Wong said the following terms were reached as part of the agreement:
1) Merrill Lynch will buy at full par value, and with no loss to the principal amount of the County’s investment, the $32 million of SLARS remaining in the County’s Merrill Lynch account.
2) Merrill Lynch will pay the County of Maui $44,500.00 for the realized losses that resulted from the September 2009 sale of $12.2 million of SLARS at a discount to par value.
3) The County has released all pending claims against Merrill Lynch and any affiliated entities or individuals in connection with its investment in SLARS, and Merrill Lynch admits no wrongdoing.
4) Merrill Lynch and County of Maui will each be responsible for their own fees and costs in this matter, except Merrill Lynch will be responsible for the total amount of any FINRA fees and costs not already assessed by FINRA.
“I’d like to thank Merrill Lynch and their attorneys for helping us to resolve this matter once and for all,” Wong said. “Their cooperation saved taxpayers time and money.”
Finance Director Agsalog added that "The County’s objectives in this case have always been safety and liquidity.
“I'm glad that we can put this in the past so that we can plan for the future."
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