Merrill Lynch

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Merrill Lynch & Co., Inc.
Type Public
NYSE: MER, TYO: 8675
Founded 1914, as Charles E. Merrill & Co.
Headquarters New York, NY, U.S.
Key people John Thain: CEO
Rosemary Berkery: Executive Vice President & General Counsel
Gregory J. Fleming: President and Chief Operating Officer
Nelson Chai: CFO
John J. Fosina: Chief Control Officer
Industry Finance and Insurance
Products Financial Services
Investment Banking
Investment management
Revenue ▲$70.59 Billion USD 2006
Net income ▼$7.8 Billion USD 2007
Employees 64,200
Website www.ml.com

Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services worldwide. The firm's world headquarters is located in New York City. The company occupies the entire 34 stories of the Four World Financial Center building in Manhattan.

Contents

[edit] History

The company was founded on January 6, 1914, when Charles E. Merrill & Co. opened for business at 7 Wall Street in New York City. A few months later, Merrill's friend, Edmund C. Lynch, joined him, and in 1915 the name was officially changed to Merrill, Lynch & Co. At that time, the firm's name included a comma between Merrill and Lynch.[1] In 1916, Winthrop H. Smith joined the firm.

In its early history, Merrill, Lynch & Co. made several successful investments. In 1921, the company purchased Pathé Exchange, which later became RKO Pictures. In 1926, the firm made its most significant financial investment at the time, purchasing a controlling interest in Safeway, transforming the small grocery store into the country's third largest grocery store chain by the early 1930s. Following this investment, the company further increased its investment banking focus by transferring its retail brokerage services to E.A. Pierce.

In 1940, the firm merged with E. A. Pierce & Co. and Cassatt & Co. and was briefly known as Merrill Lynch, E. A. Pierce, and Cassatt.[2] However after Edmund Lynch's death in 1952, the company changed its name to Merrill Lynch & Co. and was officially incorporated. The company became the first on Wall Street to publish an annual fiscal report in 1941.

In 1941, Fenner & Beane joined the firm, and the name became Merrill Lynch, Pierce, Fenner & Beane. On December 31, 1957, The New York Times referred to that name as "a sonorous bit of Americana" and said "After sixteen years of popularizing [it], Merrill Lynch, Pierce, Fenner, and Beane is going to change it—and thereby honor the man who has been largely responsible for making the name of a brokerage house part of an American saga," Winthrop H. Smith, who had been running the company since 1940. The merger made the company the largest securities firm in the world, with offices in over 98 cities and membership on 28 exchanges. At the start of the firm's fiscal year on March 1, 1958, the firm's name became Merrill Lynch, Pierce, Fenner & Smith and the company became a Big Board member of the New York Stock Exchange.[3]

Merrill Lynch rose to prominence on the strength of its brokerage network (15,000+ as of 2006),[4] sometimes referred to as the "thundering herd", that allowed it to place securities it underwrote directly.[5] In contrast, many established Wall Street firms, such as Morgan Stanley, relied on selling groups of independent brokers for placement of the securities they underwrote.[6] Until as late as 1970, it was known as the "Catholic" firm of Wall Street.[7] The firm went public in 1971 and has since become a multinational corporation with over US $1.8 trillion in client assets, operating in more than 40 countries around the world. In 1978, it significantly buttressed its securities underwriting business by acquiring White Weld & Co., a small but prestigious old-line investment bank. Merrill Lynch is best known for its Global Private Client services and its strong sales force.

On November 1, 2007, Merrill Lynch CEO Stanley O'Neal left the company, after being criticized for the way he handled the subprime mortgage crisis, which resulted in about US $ 2.24 billion in unexpected losses, and for discussing in public the possible merger with Wachovia banking corporation, without being authorized by the board to do so. He left Merrill Lynch with about US $ 161 million worth of stock options and retirement benefits.[8]. John Thain, CEO of the New York Stock Exchange, succeeded him as CEO on December 1, 2007.

On January 17, 2008, Merrill Lynch reported a $9.83 billion fourth quarter loss incorporating a $16.7 billion write down of assets associated with subprime mortgages. On April 17, 2008, Merrill Lynch reported a net loss of $1.97 billion for the first quarter of 2008. [9] Merrill responded to its losses by raising capital through the sale of preferred shares, however experts suggest that such a strategy may pose a risk to the companies credit rating which could cause an increase to the companies borrowing costs. [10]

[edit] Business groups

  • GWM: Global Wealth Management
  • GMI: Global Markets & Investment Banking Group
  • As of September 29, 2006, Merrill Lynch Investment Managers was absorbed by BlackRock, Inc.. Merrill Lynch became BlackRock's largest stockholder in the transaction, with a 49 percent stake.
  • Corporate Resources
    • Global Securities Research and Economics Group (Research)
    • GIS: Global Infrastructure Solutions
    • OGC: Office of General Counsel
    • C&PA: Communications and Public Affairs
    • CFO: Chief Financial Office
    • LTM: Leadership & Talent Management (formerly Human Resources)

[edit] Subsidiaries

[edit] Internal Professional Networks

The Merrill Lynch Professional Networks (MLPN) are employee-driven networks, organized regionally both across and within business groups. The objectives include diversifing business development, recruitment and retention, and community leadership. Not all networks are available at all Merrill Lynch office locations. Out of the 17 listed networks, the Women's Professional Network in the has by far the most members and is the most active.

Networks Available for Employees in the U.S:

  • Asian Pacific American Professional Network
  • Black Professional Network
  • Disability Awareness Professional Network
  • Hispanic Professional Network
  • LGBT Professional Network
  • Native American Professional Network
  • South Asian Professional Network
  • Women's Professional Network

Networks Available for Employees in EMEA:

  • Black Professional Network
  • LGBT Professional Network
  • Women's Professional Network
  • Parents and Carers' Professional Network
  • South Asian Professional Network

Networks Available for Employees in PacRim:

  • LGBT Professional Network
  • Parents and Carers' Professional Network
  • Women's Professional Network
  • Young Professionals' Network

[edit] Major locations

[edit] Major cases

[edit] Analyst conflict-of-interest, 2002

In May 2002, a settlement was reached with then-Attorney General Eliot Spitzer of the State of New York, imposing a $100 million fine on Merrill Lynch, as well as an agreement to sever all links between analysts' pay and investment banking revenue. The settlement was related to wrongdoings by equity analyst Henry Blodget. In December 2002 the company was fined an additional $100 million.[citation needed]

[edit] Improper sale of Class B and C mutual fund shares

On Dec. 19, 2005, the NASD announced it had fined Merrill Lynch, Pierce, Fenner & Smith, Wells Fargo Investments and Linsco/Private Ledger Corporation a total of $19.4 million for suitability and supervisory violations related primarily to sales of Class B mutual fund shares as well as some Class C mutual fund shares. Merrill Lynch was fined $14 million.[11]

[edit] Alleged charges of discrimination towards minority employees

In July 2006, a lawsuit alleging discriminatory hiring and promotion practices was brought by over 70 current and former African-American employees. Following commencement of the action, additional employees joined the suit and counsel is now seeking class-action status. These legal actions remain unresolved as of May 2008.

In June 26 2007, the U.S. Equal Employment Opportunity Commission (EEOC) brought suit against Merrill Lynch,[12] alleging the firm discriminatied against Dr. Majid Borumand because of his Iranian nationality and Islamic religion, with "reckless disregard" for his protected civil rights.[13][14] The EEOC law suit maintains that violations by members of the firm were intentional and committed with malice. Yonathan (Yoni) Epelbaum, James (Jim) Gatheral and Kishor Laud are among Merrill managers named in the ongoing lawsuit (Updates on law suit). In another case concerning mistreatment of another Iranian employee by Merrill Lynch on July 20th, 2007, less than a month after EEOC law suit, a NASD arbitration panel ordered Merrill Lynch to pay its former Iranian employee, Fariborz Zojaji $1.6 million for firing him due to his Persian ethnicity.[15][16] Merrill Lynch's actions prompted reactions from both the National Iranian-American council, and the American-Arab Anti-Discrimination Committee.[17]

Since these allegations and lawsuits were made, Merrill Lynch has made several efforts to address internal ethnic and gender bias. As a result of these efforts, in the June 2008 issue of Diversity Inc, named Merrill Lynch one of the top 10 companies for lesbian, gay, bisexual, and transgendered employees, and the #7 top company in the US for diversity overall.[1] In 2007, Merrill Lynch was named the #2 best company in the US for people with disabilities.[2] As of June 5th 2008, Merrill Lynch has created the West Asian, Middle Eastern and North African (WAMENA) Professional Network to help support and provide additional resources for employees of diverse backgrounds.

[edit] Recent Transactions

The purchase of San Jose, Calif. based First Franklin origination franchise and related servicing platform from National City Corp. NYSE: NCC was completed on Dec. 30th, 2006 for $1.3 billion.

[edit] Notable current and former employees

[edit] Business

[edit] Politics and public service

[edit] Other

[edit] Merrill family

[edit] Fictional

[edit] Works about Merrill Lynch

  • Stiles, Paul (1998). Riding the Bull: My Year in the Madness at Merrill Lynch. New York: Times Business. ISBN 0-812-92789-3. 
  • Perkins, Edwin (1999). Wall Street to Main Street: Charles Merrill and Middle-Class Investors. New York: Cambridge University Press. ISBN 0-521-63029-0. 
  • Schooley, Keith (2002). Merrill Lynch: The Cost Could Be Fatal: My War Against Wall Street's Giant. Enid: Lakepointe Publishing. ISBN 0-971-61036-3. 

[edit] See also

[edit] Cites

  1. ^ "McCrory Stores Corporation," display advertisement, The New York Times, December 15, 1915, p. 18. In full: An Investment embracing safety, good income, and possibilities for considerable advancement in market value is presented in the Preferred Stock of the McCrory Stores Corporation. Price to yield 7%. Write for Circular T. M. MERRILL, LYNCH & CO. 7 Wall Street, NEW YORK. Penobscot Bldg. DETROIT. Telecphone Rector 4940.
  2. ^ "$15,000,000 Sought By Crucible Steel." The New York Times, December 19, 1940, p. 39, lists "Merrill Lynch, E. A. Pierce and Cassatt," with a single comma following Lynch and the word "and" rather than an ampersand, as one of a number of firms underwriting an issue of bonds by Montana-Dakota Utilities Company.
  3. ^ "Revising a Sonorous Piece of Americana: Merrill Lynch, Pierce, Fenner and Smith." The New York Times, December 31, 1957, p. 29
  4. ^ Merrill Lynch - Total Merrill - Total Merrill
  5. ^ Edwin J. Perkins, Wall Street to Main Street: Charles Merrill and Middle-Class Investors, Cambridge University Press: 1999
  6. ^ Ron Chernow, The House of Morgan, Touchstone Books, 1990.
  7. ^ James B. Stewart, Den of Thieves, Touchstone Books, 1992. "[I]n 1971, Wall Street was still split between the "Jewish" and the "WASP" firms. At an earlier time, when major corporations and banks had discriminated overtly against Jews, Wall Street had rewarded merit and enterprise. Firms like Goldman, Sachs, Lehman Brothers, and Kuhn, Loeb & Co. (made up historically of Jews of German descent) had joined the ranks of the most prestigious WASP firms: Morgan Stanley—an outgrowth of J. P. Morgan's financial empire—First Boston, Dillon, Read, and Brown Brothers Harriman. Giant Merrill Lynch Pierce Fenner & Smith, something of an anomaly, had once been considered the "Catholic" firm. Kidder, Peabody remained firmly in the WASP camp."
  8. ^ http://www.tijd.be/nieuws/ondernemingen/financien/artikel.asp?Id=3331161
  9. ^ Merrill Lynch Reports
  10. ^ http://money.cnn.com/news/newsfeeds/articles/djf500/200804250840DOWJONESDJONLINE000645_FORTUNE5.htm
  11. ^ NASD News Release
  12. ^ U.S. Sues Merrill on Treatment of Muslim
  13. ^ http://online.wsj.com/public/resources/documents/eeoc062607mer1.pdf EEOC vs. Merrill Lynch $ Co. - Complaint
  14. ^ Liddle & Robinson L.L.P. Press Release
  15. ^ Discrimination Ruling Another Black Eye for Merrill
  16. ^ Fired Iranian broker wins $1.6M from Merrill
  17. ^ EEOC: Merrill Lynch Hired Iranian for His Brains, Fired Him for His Nationality
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List of investment banks

[edit] External links