WASHINGTON (AP) — Merrill Lynch has agreed to pay $131.8million to settle U.S. civil charges that
it misled investors aboutrisky mortgage bonds it sold ahead of the 2008 financial crisis.TheSecurities and
Exchange Commission announced the settlement Thursday.Merrill Lynch was accused using misleading materials
to market theinvestments in 2006 and 2007. The materials gave investors a falseimpression that the
collateral for the securities was chosen by anindependent firm, the SEC said.Merrill neither admitted
nordenied the allegations. But it did agree to refrain from futureviolations of the securities laws. The SEC
also censured Merrill,bringing the possibility of a stiffer sanction if the alleged violationis
repeated.When the housing bubble burst in 2007, millions ofhome borrowers defaulted on their loans and
bundles of mortgages sold bybig banks left investors with billions in losses.Bank of America acquired
Merrill at the height of the crisis in September 2008.TheSEC allegations against Merrill involved its
marketing of pooledsecurities known as collateralized debt obligations. Wall Street bankssold CDOs at the
height of the housing boom. They combine slices of debtwith varying levels of risk.The settlement was the
latest in aseries of federal actions against Wall Street banks as the governmentcontinues to resolve claims
over their conduct five years after thecrisis.Goldman Sachs, JPMorgan Chase, Citigroup and other bigbanks
have been accused of abuses in sales of securities linked tomortgages in the years leading up to the crisis.
Together, they havepaid hundreds of millions in penalties to settle civil charges broughtby the SEC, which
accused them of deceiving investors about the qualityof the bonds they sold.Last month JPMorgan, the biggest
U.S.bank, agreed to pay $13 billion in a civil settlement with the JusticeDepartment and state regulators
over its sales of risky mortgagesecurities. It was the largest settlement ever between the JusticeDepartment
and a corporation.Justice also has accused Bank ofAmerica of civil fraud in failing to inform investors of
risks in itssale of $850 million in mortgage securities in 2008. The SEC filed arelated lawsuit. Bank of
America has disputed the allegations.Copyright 2013 The Associated Press. All rightsreserved. This material
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