Kentucky’s largest state-chartered bank has sued Merrill Lynch for $40 million over failed securities bought through the investment firm.
Pikeville-based Community Trust Bank filed the suit in federal court on New Year’s Eve. Community Trust Bank claims it now holds $9.9 million in worthless securities because of the deal.
The Lexington Herald-Leader reports that Community Trust says in the suit that it bought the securities in January 2006 based on Merrill Lynch’s assertion that the securities were safe short-term investments.
The securities were linked to Fannie Mae, the mortgage giant that was taken over by the federal government and stopped paying dividends.
The paper said it could not reach a Merrill Lynch spokesman for comment. Phone and e-mail messages left by The Associated Press on were not immediately returned.
Information from: Lexington Herald-Leader,
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