Magazine article American Banker

Ohio Department of Insurance Moves against a Merrill Lynch Subsidiary

Magazine article American Banker

Ohio Department of Insurance Moves against a Merrill Lynch Subsidiary

Article excerpt

COLUMBUS, Ohio -- In its strongest action yet against sellers of Baldwin-United Corp. annuities, the Ohio Department of Insurance will move to revoke the insurance license of a Merrill Lynch & Co. subsidiary.

The regulator says the Merrill Lynch Life Agency Inc. of Ohio knew Baldwin-United was in serious financial trouble but it continued to sell Baldwin's single-premium deferred annuities as "risk-free" and "guaranteed safe" investments. It also says some agents who sold the annuities were not licensed to do so.

Baldwin-United Corp., a Cincinnati-based financial services concern, filed for protection from creditors' lawsuits under Chapter 11 of the federal Bank-ruptcy Code in September 1983. Two months earlier, insurance regulators in Arkansas and Indiana took control of Baldwin's six annuity-issuing subsidiaries. Merrill Lynch halted its sales of the annuities in April of that year.

Responding to the insurance department's action, Merrill Lynch called the revocation proposal "outrageous." The brokerage firm added that it will fight the regulator's attempt to revoke its license to sell insurance in Ohio.

Dean Fadel, the insurance department's legislative and public affairs officer, says Merrill Lynch will almost certainly request a hearing on the proposed license revocation. The state will hold that hearing early next year, Mr. Fadel says.

The Ohio regulator's action follows a meeting of insurance regulators and attorneys general from 37 states in Atlanta. At the October meeting, the regulators -- who said they were tired of waiting for brokers and insurers to agree on a plan to pay the 165,000 Baldwin annuity holders nationwide -- announced that they would file suits, levy fines, and move to revoke the licenses of sellers of the annuities.

Later in October, insurance departments in Kansas and Kentucky fined the Merrill Lynch insurance operations in those states $45,000 and $100,000, respectively. …

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