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Merrill Parking Its Bad Subprime Loans?

By Mark H. Astarita, Esq.

Everyone is waiting for the other shoes (plural) to drop at Merrill, including an accurate count of its subprime losses, which are expected to go higher. Reuters posted a story this morning with the headline "Hedge Funds deals postpone Merrill losses" which references a Wall Street Journal story that claims that a hedge fund bought $1 billion in commercial paper issued by a Merrill-related entity containing mortgages, and the hedge fund had the right to sell back the commercial paper to Merrill after a year for a guaranteed minimum.I obviously don't know if the story is true, but if it is, that transaction sure sounds like parking or a wash trade, and if a broker on a trading desk entered into such a transaction, FINRA would be all over him...continue to full post

Full post as published by SECLaw.com on November 02, 2007 (boomark / email).