Merrill settles with Massachusetts over ARS

Merrill Lynch & Co. Inc. of New York has reached an agreement with the state of Massachusetts over the sale of auction rate securities. Beginning Oct. 15, the firm will buy back at par ARS held by retail clients with less than $3 million in ARS holdings, according to a statement today from William Galvin, Massachusetts secretary of the commonwealth. This initial buyback will amount to about $2.1 billion, said Brian McNiff, a spokesman for the secretary. On or after Jan. 15, Merrill will buy back ARS from clients with holdings of $100 million or less. The settlement does not cover ARS investigations of Merrill being conducted by other states or federal regulators. But the deal is a “national settlement” that will apply to all investors at the firm, Mr. McNiff said. Mark Herr, a Merrill Lynch spokesman, declined to comment. The firm had offered to buy back an estimated $10 billion of the securities. That offer was to begin Jan. 15.