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Merrill settles Calif. suit
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June 2, 1998: 5:33 p.m. ET
Investment bank settles with Orange County for $400M; no earnings impact
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NEW YORK (CNNfn) - Investment banking behemoth Merrill Lynch said Tuesday it settled its suit with Orange County, Calif. over the county's 1994 bankruptcy -- the third lawsuit the firm has settled in as many months.
Under terms of the agreement, Merrill Lynch & Co. Inc. said it will pay Orange County $400 million to bring the county's lawsuit to a close.
"This has been a long and difficult period for the people of Orange County," said Thomas W. Hayes, the former California state treasurer who led Orange County's fight against the company. "We are pleased that in a spirit of mutual cooperation, we were able to negotiate an end to this lengthy and contentious litigation."
Hayes added he believes the settlement is fair for the county and the 200 other municipal entities involved, and he said it goes a long way toward making them "whole for losses suffered by the investment pool."
Merrill Lynch maintains it acted in good faith and said its decision to settle was driven by the desire to end uncertainty surrounding the suit.
"We are confident we acted properly and professionally in our relationship with Orange County," the company said in a statement. "However, after weighing the substantial costs and distraction of continuing to litigate, we determined that it would be in the best interests of Merrill Lynch and all our constituents to definitively bring this matter to a close and end the uncertainty inherent in any judicial proceeding."
Merrill Lynch noted it is fully reserved for the settlement and that the payment will have no financial impact on earnings reported in the 1998 second quarter or subsequent quarters.
Moreover, the firm said it will return excess collateral of approximately $20 million that it has been holding to Mr. Hayes for distribution to the pool participants.
Separately, Merrill Lynch said it also has reached an agreement in principle to settle a lawsuit brought by the Irvine Ranch Water District for an additional $17.1 million.
In April, the firm reached a tentative settlement in a class-action suit brought by eight women who had accused the giant securities firm of sex discrimination.
The settlement called for the eight plaintiffs, who include one current and seven former Merrill Lynch financial consultants, to share $600,000 for serving as class representatives, Merrill Lynch said in a news release.
The company's stock (MER) closed relatively unchanged Tuesday on the New York Stock Exchange at 89-1/16, down 5/16. 
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Merrill Lynch
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