Merrill (company) facts for kids
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Trade name
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Merrill |
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| Division | |
| Industry | Financial services |
| Founded | January 6, 1914 |
| Founders |
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| Headquarters | 250 Vesey Street,
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U.S.
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Area served
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Worldwide |
| Services | Investment management |
| Revenue | US$13.8 billion (2012) |
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Number of employees
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15,100 (Financial Advisors as of 2010) |
| Parent | Bank of America |
| Divisions |
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Merrill, also known as Merrill Lynch, is a big company that helps people manage their money. It's a part of Bank of America. Merrill helps people invest their money and plan for their future. They also help businesses with their finances.
Merrill has its main office in New York City. It used to be a huge independent company. Now, it works with BofA Securities, which is another part of Bank of America that helps businesses. Merrill has many financial advisors who help clients with their money. They manage trillions of dollars for people and companies. Merrill also has a service called Merrill Edge for people who want to invest online.
Before 2009, Merrill Lynch was a separate company. But during a big financial crisis in 2008, Bank of America decided to buy Merrill Lynch. This happened in January 2009. Later, in 2019, Bank of America changed the name of this part of the company to simply "Merrill." Merrill Lynch was famous for its large group of financial advisors, sometimes called the "thundering herd." These advisors helped sell investments directly to clients.
The Story of Merrill
How Merrill Started
The company began on January 6, 1914. A man named Charles E. Merrill opened his business, Charles E. Merrill & Co., in New York City. A friend, Edmund C. Lynch, joined him a few months later. In 1915, the company officially became Merrill, Lynch & Co. The comma in the name was removed in 1938. In 1916, Winthrop H. Smith also joined the firm.
In the 1920s, Merrill Lynch invested in other businesses. For example, in 1921, they bought a company called Pathé Exchange, which later became RKO Pictures, a movie studio. In 1926, they helped a small grocery store chain called Safeway Inc. grow into one of the biggest in the country.
In 1930, Charles E. Merrill made a big change. He separated the part of the company that helped everyday people invest. This part went to another company called E. A. Pierce & Co.. Merrill wanted to focus more on helping big businesses. Many of Merrill's employees, including Edmund Lynch and Winthrop Smith, moved to E.A. Pierce. E.A. Pierce became the largest brokerage in the U.S. and was very modern. They even used early IBM machines for record keeping.
Even though E.A. Pierce was big, it had money problems in the 1930s. After Edmund C. Lynch passed away in 1938, Winthrop Smith talked with Charles E. Merrill about joining their companies again. On April 1, 1940, Merrill Lynch merged with E. A. Pierce & Co. and another company called Cassatt & Co. For a short time, it was called Merrill Lynch, E. A. Pierce, and Cassatt. In 1941, this new company was the first on Wall Street to share its yearly financial report with the public.
Also in 1941, the company merged with Fenner & Beane, another large investment company. The combined company became the biggest in the U.S. for helping people buy and sell investments. It was renamed Merrill Lynch, Pierce, Fenner & Beane.
After the War
In 1952, the company officially became a corporation. On December 31, 1957, the company changed its name again to honor Winthrop H. Smith, who had been leading the company since 1940. On March 1, 1958, the company's name became "Merrill Lynch, Pierce, Fenner & Smith." It was the largest investment firm in the world, with offices in many cities.
In 1964, Merrill Lynch bought C. J. Devine & Co., a top company that dealt with U.S. Government Securities. This helped Merrill Lynch create new ways for people to invest in government bonds.
In June 1971, Merrill Lynch became a public company. This meant its shares could be bought and sold on the stock market. It grew into a huge international company, helping clients in over 40 countries.
In 1977, Merrill Lynch created a special account called the Cash Management Account (CMA). This account allowed customers to put all their extra money into a special fund that earned interest. It also came with check-writing and a credit card.
In 1978, Merrill Lynch grew its business of helping companies sell new stocks by buying White Weld & Co., a respected investment bank.
Merrill's Canadian Business
In the 1990s, Merrill Lynch had some changes with its business in Canada. In 1990, they sold their Canadian operations that helped individual clients.
However, in 1998, Merrill Lynch returned to the Canadian investment market. They bought a company called Midland Walwyn Inc. At that time, Canada was a very important market for personal investments.
But in December 2001, Merrill Lynch sold Midland Walwyn again.
The 2008 Financial Crisis
In 2007 and 2008, Merrill Lynch faced big financial problems because of something called the subprime mortgage crisis. This was a time when many people couldn't pay back their home loans, which caused big losses for banks. Merrill Lynch lost billions of dollars.
In November 2007, the company's CEO, E. Stanley O'Neal, was replaced by John Thain. Thain tried to fix the company's problems. Merrill Lynch sold some of its businesses and got money from a Singapore government investment group called Temasek Holdings.
Even with these efforts, Merrill Lynch continued to lose money. By July 2008, the company had lost a lot of money in just one year. Its stock price also dropped a lot.
Problems with CDOs
Merrill Lynch, like many other banks, was heavily involved in something called collateralized debt obligations (CDOs). These are complex investments made up of many different loans, including home loans. To get enough home loans for these CDOs, Merrill bought a company called First Franklin Financial Corp. in 2006.
Between 2006 and 2007, Merrill Lynch was a main company for creating many CDOs. But by the end of 2007, the value of these CDOs dropped a lot, causing Merrill to lose billions of dollars.
Sale to Bank of America
Because of its huge losses and worries about its financial health, Merrill Lynch was sold. On September 14, 2008, during the height of the financial crisis, Bank of America announced it would buy Merrill Lynch. The deal was worth about $50 billion. This sale happened quickly because government officials were worried about the financial system.
After the sale, Merrill Lynch received billions of dollars from insurance agreements with AIG, which was also helped by the U.S. government.
After Joining Bank of America
After becoming part of Bank of America, Merrill Lynch continued to offer services for managing people's money. Merrill Lynch's investment banking part joined with Bank of America's existing investment bank to form BofA Securities.
Launch of Merrill Edge
On June 21, 2010, the company launched Merrill Edge. This is an online platform that allows customers to trade investments themselves.
New Name: Merrill
In February 2019, Bank of America announced that the "Merrill Lynch" name would be shortened to simply "Merrill."
Important Actions and Settlements
Orange County Settlement
In 1998, Merrill Lynch paid Orange County, California $400 million. This was to settle claims that the company sold risky investments to the county's former treasurer, who then lost a lot of money. The county had to file for bankruptcy. Merrill settled without saying it did anything wrong.
Analyst Research Settlement
In 2002, Merrill Lynch agreed to pay $100 million for publishing research that was misleading. This agreement meant Merrill Lynch had to be more open about its research and separate it from its investment banking business.
Issues with Henry Blodget
Between 1999 and 2001, during the "dot-com bubble" when many internet companies were popular, a well-known analyst at Merrill Lynch named Henry Blodget gave different opinions about stocks in private emails compared to what he said publicly. In 2003, he was charged with civil fraud. He settled the case, paid a fine, and was not allowed to work in the securities industry again.
Enron and Merrill Lynch
In 2004, some Merrill Lynch executives were found guilty in a case related to Enron, a company that had big accounting problems. The case was about a deal in 1999 involving Merrill, Enron, and the sale of some electricity-producing barges. The charges claimed that the sale was not real and allowed Enron to wrongly record profits. The Merrill Lynch executives were convicted, but later, their convictions were overturned on appeal. The Justice Department decided not to try the case again. Merrill Lynch also settled civil charges related to this case.
Fairness in the Workplace
Merrill Lynch has faced lawsuits regarding fairness in the workplace. In 2007, the U.S. Equal Employment Opportunity Commission (EEOC) sued Merrill Lynch. They said the company treated an employee unfairly because of his Iranian background and Islamic religion. In another case, an arbitration panel ordered Merrill Lynch to pay a former Iranian employee $1.6 million because he was fired due to his Persian ethnicity.
In 2008, a court ruled against Merrill Lynch in a lawsuit filed by a gay employee who experienced unfair treatment.
In 2013, the company agreed to pay $160 million to settle a lawsuit about unfair treatment against Black employees. The lawsuit claimed that Merrill Lynch had not increased the number of Black brokers as it had agreed to do years earlier. The money was available to Black brokers and trainees who worked at the firm since May 2001.
Market Timing Settlement
In 2005, Merrill Lynch paid a $10 million penalty. This was because some financial advisors at one of their offices helped a client make quick profits by "market timing." This practice can harm long-term investors in mutual funds. Merrill Lynch was found to have not properly supervised these advisors.
2008 Bonus Payments
In 2008, even though Merrill Lynch reported huge losses of $27 billion, the company paid out $3.6 billion in bonuses. This happened around the same time they received money from a government program designed to help struggling companies.
Misleading Customers
In 2018, the U.S. Securities and Exchange Commission (SEC) charged Merrill Lynch with misleading customers about where their trades were happening between 2008 and 2013. Merrill Lynch admitted to the wrongdoing and agreed to pay a $42 million penalty.
In 2019, Merrill Lynch also agreed to pay over $8 million to settle charges about how they handled certain international stock receipts called American depositary receipts (ADRs).
See also
In Spanish: Merrill Lynch para niños
- Broker-dealer
- Credit crunch
- Liquidity crisis
- Primary dealer
