Merrill Lynch: Safeway, the Thundering Herd and the First Franklin Bet

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Merrill Lynch began on January 6, 1914, when Charles E. Merrill opened his firm on Wall Street; his friend Edmund C. Lynch joined months later, and by 1915 it was Merrill, Lynch & Co., a comma kept until 1938. Merrill believed in everyday consumer commerce: the firm bought Pathé, later RKO Pictures, in 1921 and took control of Safeway in 1926, building it into the third largest U.S. grocery chain. In 1930 it spun its retail brokerage off to E.A. Pierce & Co., which by 1938 ran a private network of over 23,000 miles of telegraph wire. Mergers in 1940 and 1941 reunited Pierce, Cassatt & Co. and Fenner & Beane with Merrill Lynch, and in 1941 it became the first Wall Street firm to publish an annual report.

Renamed Merrill Lynch, Pierce, Fenner & Smith in 1958, it became the world's largest securities firm, selling through thousands of salaried advisors nicknamed the thundering herd. Scandals followed its push into institutional finance: a $400 million Orange County bankruptcy settlement in 1998, a $100 million settlement over analyst Henry Blodget, and the Enron Nigerian barge case, in which executives' convictions were overturned on appeal. From 2003, under Christopher Ricciardi, it pushed into CDOs, bought subprime lender First Franklin for $1.3 billion in 2006, and underwrote $93 billion of CDOs in 2006 and 2007 while holding toxic tranches itself. After an $8.4 billion write-down in November 2007 and $19.2 billion in losses over a year, Bank of America agreed to buy it for $50 billion on September 14, 2008.

• Merrill Lynch was known as the Catholic firm of Wall Street, run largely by Irish Catholic executives.
• It became the second largest shareholder in Japanese anime studio TMS Entertainment.
• The Enron barge deal let Enron book $12 million in pre-tax profit through an alleged secret buyback guarantee.
• A 2013 settlement of $160 million resolved a 2005 class action by Black brokers, filed while Stanley O'Neal was CEO.
• Executives set aside $3.6 billion in bonuses just before the sale, and in 2019 several businesses were rebranded simply as Merrill.