lapse. In addition to suits alleging misconduct in the sale of the instruments to the county, the firm was named as a defendant in other suits by investors who bought Merrill Lynch's California and other municipal bond funds or the county bonds themselves, and in suits by Merrill Lynch stockholders because of the firm's potential liability in all these suits. The firm won a key ruling in 1996 when a federal bankruptcy court ruled that the actions of the Orange County officials who handle the investments were not illegal, so the county could not disassociate itself from their actions (and place the blame on Merrill Lynch). Nonetheless, pending litigation is expected to continue for some years.
Fundamentally, derivatives are contracts. These contracts are written between two parties, oft
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