Treasurer Lemoine Congratulates City of Springfield
February 1, 2008
I congratulate the City of Springfield on successfully resolving its dispute with Merrill Lynch regarding an unauthorized CDO purchase made by Merrill Lynch for the City last year. It appears that Merrill Lynch’s acknowledgement that it purchased the CDOs without the consent of the City led to the quick resolution of this particular investment issue.
The Maine State Treasurer’s investment policy barred any Springfield-like direct purchase of CDOs, which are investment-grade securities backed by a pool of bonds, loans, and other assets. The precedent is nonetheless encouraging.
Springfield now appears set to join Maine and others in pursuing resolution for the Mainsail II, a SIV-lite entity, commercial paper transactions conducted last year. The Maine State Treasurer’s Office continues working with both the Maine Attorney General and the Maine Office of Securities to support their investigation into details of the Mainsail II investment. That investigation is underway.
Again, I congratulate the City of Springfield in this important success.