Merrill pays out in landmark subprime lawsuit

In the first major legal settlement over subprime losses, Merrill Lynch has agreed to pay the city of Springfield, Massachusetts $13.9 million in compensation after accepting that the bank invested city funds in collateralised debt obligations underwritten by tranches of subprime mortgages without the permission of local authorities.

In a victory for municipal officials, Merrill Lynch acknowledged last week that neither “the City of Springfield nor the Springfield Financial Control Board approved

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