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...commission transactions will be off from last year, the average 16% that the firms earn on invested capital compares well with any other line of U.S. business. Then, of course, there are those celebrated Wall Street Christmas bonuses -even though many brokers are cutting back a bit. At Merrill Lynch, biggest of all, employees with more than 20 years' service, who collected an ex tra 23 weeks' salary last Christmas, will get only 22 weeks extra this year. Five-to ten-year men will get 17 weeks' extra pay, down from 18 weeks last year. But Merrill...
...institutional customers as early as June 20 - four days before Douglas an nounced its troubles. During that period Douglas stock dropped from $90½ a share to $69; the investment companies liquidated or sold short their holdings, thus saving or earning a total of $4,500,000. Merrill Lynch was paid for its early-warning services, contended the SEC, by the commissions it collected on the institutional trading. And even as the big organizations were dumping Douglas, Merrill Lynch continued to buy the stock for some of its smaller customers...
...brokerage house denies any wrongdoing. But in order to bypass the courts, Merrill Lynch "consented to findings of violations" of the federal securities laws "without admitting" the validity of the charges. Explained President Donald T. Regan: "We decided it would be best not to engage in a prolonged and costly dispute with a Government agency." Such litigation would probably have worked its way up to the U.S. Supreme Court and taken years to resolve. During that time, the case would have continued to generate even more harmful publicity...
...settling with the SEC, the firm managed to blunt some of the impact of the case. Still, the SEC publicly rebuked ten Merrill Lynch employees, and seven were ordered temporarily suspended without pay. Among them were Archangelo Catapano, a vice president and the firm's aerospace specialist, who was suspended for 60 days, Philip F. Bilbao, vice president and manager of institutional services, and five of his salesmen each drew 21 days. Three other Merrill Lynch employees, including two more vice presidents, were just censured. The commission also ordered Merrill Lynch to close its New York institutional sales office...
More to Come. The stain on the image of the firm that likes to boast that it brought Wall Street to Main Street will be difficult to erase. The 15 institutional investors accused of acting on the Merrill Lynch tip-including Dreyfus Corp., the Madison Fund and Investors Management Co.-are still to appear before an SEC examiner for hearings on the Douglas case. And individual Merrill Lynch customers who feel that they were wronged by the Douglas incident may claim compensation for their losses...