Merrill Lynch & Co. and Goldman Sachs Group Inc. face increased pressure by New York State Attorney General Andrew Cuomo to settle claims they misled investors on auction-rate debt as Wachovia Corp. agreed to buy back $9 billion of the bonds.
Merrill's prior offer to repurchase $10 billion of the securities was inadequate and the firm may face ``imminent'' legal action, Cuomo said yesterday.
New York has subpoenaed about 25 firms involved in sales of auction-rate securities, including five that then settled. Goldman is among the firms being probed, he said.
Wachovia joined Citigroup Inc., Morgan Stanley, JPMorgan Chase & Co. and UBS AG in settlements stemming from a nationwide investigation into why auction-rate securities were marketed as safe as cash until the $330 billion market collapsed. Regulators have sought auction-rate buybacks for customers, reimbursement for consumers forced to sell securities at prices below face value and relief for institutional investors.
