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 |
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Merrill (officially Merrill Lynch, Pierce, Fenner & Smith Incorporated) is a big company that helps people manage their money and investments. It used to be called Merrill Lynch. Today, it's part of Bank of America.
Merrill helps people with things like investment management (deciding where to put money to make it grow) and wealth management (planning how to use and save money). They also do prime brokerage and broker-dealer work, which means they help other big financial companies with their trading.
The company's main office is in New York City. Merrill has over 14,000 financial advisors. These advisors help clients manage a huge amount of money, about $2.8 trillion! Merrill also has a special part called Merrill Edge that offers online investing and advice.
Before 2009, Merrill Lynch was its own public company. But during a big financial crisis in 2008, Bank of America bought Merrill Lynch. This deal was finished in January 2009. In 2019, Bank of America changed the unit's name to just "Merrill."
Merrill Lynch became famous because of its many financial advisors. They were sometimes called the "thundering herd." These advisors helped the company sell investments directly to people. This was different from other firms that used independent brokers.
Contents
History 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 few months later, his friend, Edmund C. Lynch, joined him.
In 1915, the company's name officially changed to Merrill, Lynch & Co. The comma in the name was removed in 1938. In 1916, Winthrop H. Smith also joined the firm.
In the early years, Merrill invested in different types of businesses. In 1921, they bought Pathé Exchange, which later became a movie company called RKO Pictures. In 1926, they bought a big part of Safeway Inc., helping it become one of the largest grocery store chains.
In 1930, Charles E. Merrill made a big change. He separated the part of the company that helped regular people invest. This part went to a company called E. A. Pierce & Co.. Merrill wanted to focus on helping large companies with their finances.
Many of Merrill's employees, including Edmund C. Lynch and Winthrop H. Smith, moved to E.A. Pierce. E.A. Pierce became the biggest brokerage firm in the U.S. It was very modern, using early IBM machines for record keeping. By 1938, E.A. Pierce had a huge private network of telegraph wires, over 23,000 miles long, used for sending investment orders.
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 firm called Cassatt & Co.. For a short time, the company was known as Merrill Lynch, E. A. Pierce, and Cassatt. In 1941, it was the first company on Wall Street to share its yearly financial report with the public.
In 1941, the company merged again with Fenner & Beane. This company was based in New Orleans and was also a big financial firm. The combined company became the clear leader in stock brokerage in the U.S. Its name changed to Merrill Lynch, Pierce, Fenner & Beane.
After the War Years
In 1952, the company became a holding company called Merrill Lynch & Co. This meant it became a formal corporation after being a partnership for many years. On December 31, 1957, The New York Times said the name was "a sonorous bit of Americana."
The newspaper also said the company would change its name to honor Winthrop H. Smith. He had been leading the company since 1940. On March 1, 1958, the firm's name became "Merrill Lynch, Pierce, Fenner & Smith." It also became a member of the New York Stock Exchange.
In 1964, Merrill Lynch bought C. J. Devine & Co. This company was a top dealer in U.S. Government Securities. This purchase helped Merrill Lynch grow its business in government bonds. It also helped them create new money market products in the 1970s and 1980s.
In June 1971, Merrill Lynch became a public company. This meant its shares could be bought and sold by anyone. It was a big company with over $1.8 trillion in client money, working in more than 40 countries.
In 1977, the company started its Cash management account (CMA). This allowed customers to put all their cash into a money market fund. It also included check-writing and a credit card.
In 1978, Merrill Lynch bought White Weld & Co.. This helped them greatly increase their business of helping companies sell new stocks and bonds.
Canadian Operations in the 1990s
In 1990, Merrill Lynch sold its Canadian business that helped individual clients. It sold this part to CIBC Wood Gundy.
In June 1998, Merrill Lynch started its Canadian investment business again. It bought Midland Walwyn Inc. At that time, Canada was the seventh-largest market for personal investments.
However, in December 2001, Merrill Lynch sold Midland Walwyn back to CIBC Wood Gundy.
Investment in TMS Entertainment (2003)
In 2003, Merrill Lynch became the second-largest owner of a Japanese animation studio called TMS Entertainment. Merrill Lynch bought a 7.54% share of TMS. They said they bought the shares just as an investment and did not plan to control the company.
The Financial Crisis and Sale to Bank of America
In 2007, Merrill Lynch faced big financial problems because of something called the subprime mortgage crisis. This was a time when many people could not pay back their home loans, which caused big losses for banks. Merrill Lynch lost billions of dollars.
Because of these losses, Merrill Lynch's CEO, Stanley O'Neal, left the company. John Thain became the new CEO in December 2007. He made some changes to the company's leadership. Merrill Lynch also sold some parts of its business and got money from a Singapore investment group to help its finances.
By July 2008, Merrill Lynch had lost a lot more money, about $19.2 billion in one year. Its stock price also dropped a lot. The company tried to sell more investments to reduce its risks.
The Attorney General of New York also threatened to sue Merrill Lynch. This was because the company might have not been clear about the risks of some investments related to mortgages.
During the week of September 8, 2008, another big bank, Lehman Brothers, was in trouble. People worried that if Lehman Brothers failed, other banks like Merrill Lynch might also be in danger.
On Sunday, September 14, 2008, Bank of America announced it would buy Merrill Lynch. The deal was worth about $50 billion. This purchase helped save Merrill Lynch during the financial crisis.
Some reports later showed that federal officials encouraged this merger. They said that if Bank of America did not buy Merrill Lynch, the government might change Bank of America's leadership. In 2009, it was also reported that Merrill Lynch received billions of dollars from an insurance company, AIG, which was helped by government money.
After Joining Bank of America
After the merger, Bank of America kept the Merrill Lynch name for its wealth management services. This is the part of the business that helps people manage their money. Bank of America also combined Merrill Lynch's investment banking part into a new group called BofA Securities.
Merrill Edge is Launched
On June 21, 2010, the company started Merrill Edge. This is an electronic trading platform. It allows customers to invest and trade online easily.
New Name: Merrill
In February 2019, Bank of America announced that the division's name would change from "Merrill Lynch" 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 it sold risky investments to the county's former treasurer. The county lost a lot of money and had to file for bankruptcy. Merrill Lynch settled without saying it did anything wrong.
Analyst Research Settlement
In 2002, Merrill Lynch agreed to pay $100 million. This was because it published misleading research about stocks. As part of the agreement, Merrill Lynch promised to be more open about its research. It also agreed to separate its research from its investment banking business.
Misleading Investors by Henry Blodget
Between 1999 and 2001, during the dot-com boom, a famous analyst at Merrill Lynch named Henry Blodget gave different opinions about stocks in private emails than what he said publicly. In 2003, he was charged with misleading investors. He settled the case and was not allowed to work in the stock industry again. He also paid a $2 million fine.
Fair Treatment of Employees
On June 26, 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. The EEOC said the company acted carelessly.
In another case, on July 20, 2007, a group ordered Merrill Lynch to pay $1.6 million to a former Iranian employee. He said he was fired because of his Persian background. Merrill Lynch was criticized by groups that support Iranian Americans and Arab Americans.
In August 2013, the company agreed to pay $160 million to settle a lawsuit. This lawsuit was brought by a Black employee in 2005. It claimed that Merrill Lynch did not treat Black brokers fairly. The company had signed an agreement years before to increase the number of Black brokers. However, the lawsuit said they had not met this goal. The money was given to Black brokers and trainees who worked at the firm since May 2001.
Market Timing Settlement
In March 2005, Merrill Lynch paid a $10 million fine. This was for improper trading activities at one of its offices. Some financial advisors made quick profits by moving money in and out of mutual funds very fast. This practice, called "market timing," can harm long-term investors. Merrill Lynch did not properly watch over these advisors.
Bonus Payments in 2008
In 2008, Merrill Lynch paid $3.6 billion in bonuses to its employees. This happened even though the company reported huge losses of $27 billion that same year. A third of the bonus money came from government funds meant to help banks during the financial crisis.
Hiding Losses
In 2010, a Merrill Lynch trader in London tried to hide $100 million in losses he had made for the bank. He was banned from working in the stock industry in the UK for at least five years.
Being Clear with Customers
On June 19, 2018, the U.S. Securities and Exchange Commission (SEC) charged Merrill Lynch. They said the company misled customers about where their trades were happening between 2008 and 2013. Merrill Lynch admitted it did wrong and agreed to pay a $42 million fine.
On March 22, 2019, Merrill Lynch also agreed to pay over $8 million. This was to settle charges about how it handled certain international stock receipts called American depositary receipts. The company did not admit or deny the findings but agreed to pay back money it gained unfairly and pay a penalty.
Images for kids
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E. A. Pierce & Co. merged with Merrill Lynch in 1940.
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Fenner & Beane was acquired by the firm in 1941.
See also
In Spanish: Merrill Lynch para niños
- Broker-dealer
- Credit crunch
- Liquidity crisis
- Primary dealer
Merrill Lynch
