The Orange County Bankruptcy

In 1930, the party exchange its retail ph genius line to Wall Street's largest brokerage firm, E. A. hurtle, and survived the Depression as an investment banking firm. Merrill kill reacquired the retail business in a 1940 merger with Pierce, and the next year the lodge merged with Fenner and Beane; Winthrop Smith, an employee transferred to Pierce in 1930, became a partner in 1958 and the company's name grew to Merrill Lynch Pierce Fenner and Smith.

The company continued to grow by engage its strategy of seeking new investor groups, aiming information and advertising campaigns at small investors. Merrill Lynch was the first NYSE member to control (in 1959) and go public (in 1971). During the 1960s, it diversified into government securities, real state financing and sales, and asset management and consulting.

In the 1970s, under Donald Regan (later Ronald Reagan's secretary of the treasury and chief of staff), the company introduced the patented Cash charge Account and built up its investment banking, insurance, and foreign operations.

Merrill Lynch's underwriting business expanded significantly during the 1980s. It became the global leader in offerings and apprised on one of the largest mergers, Kohlberg Kravis Roberts's leveraged buyout of RJR Nabisco. After the 1987 crash, Merrill Lynch retrenched and reorganized, eliminating its less moneymaking segments (merchant banking, real estate, and its mortgage insurance business) and closing

In orangish County, the county's investment pool (which contains funds from the county, its cities, schooltime districts and special districts) owned few derivative contracts, but numerous derivative securities. Most of these securities were structured nones, which are notes that are bespoken to fit the needs of their purchasers. If a buyer has strong convictions active the market, he can take on high find with the promise of high return. So long as the buyer is correct, the investment pays off; if the buyer is incorrect, there are exacting penalties.

Campbell, Ronald. "Orange County, Merrill Lynch Escalate Their Public War of Words." Knight-Ridder/Tribune product line News, May 1, 1996, 5010069.

The company could also prepare literature which informs consumers approximately the more complex investment instruments which the company offers; this literature should be prepared in language which nonfinancial professionals can understand. man Citron was ultimately responsible for the investments and while it can be expected that the treasurer of a county such as Orange County would be well versed in investment camber and instruments, there are so many types of investments carrying various levels of seek that it is impossible for any one person to be exclusively educated on all of them. Merrill Lynch plays the character of consultant to its customers, and helping them understand their investment portfolio is an important responsibility and one which should not be taken lightly.

The most intriguing of these alternatives, however, is that which has the company taking on a highly active role in communities. Such a role would recognize that the company is a for-profit operation and not a charity, so it would render to urinate long-term relationships with new customers, but it would also build on Merrill Lynch's tradition of seeking out investors who are not normally involved with the market.

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