Court orders release of grand jury investigation of Merrill Lynch

CALIFORNIA–In mid-June, an appellate panel in Santa Ana unanimously ordered the release of transcripts of a grand jury investigation into whether financial services giant Merrill Lynch bore any liability for the 1994 bankruptcy of Orange County.

The Los Angeles Daily Journal and other media organizations sought access to the transcripts last June after the district attorney called off the grand jury investigation in response to an agreement by Merrill Lynch to pay the county $30 million.

Notwithstanding a state statute rendering grand jury proceedings confidential, the court observed that continued secrecy would not serve the interests of justice or further any other important governmental function, and that disclosure was necessary to preserve public confidence in the integrity of the grand jury system.

The court observed that the transcripts should be released to offset any perception that the target of a grand jury investigation could “buy its way out,” or that prosecutors initiate investigations “to coerce such a payment.” According to the court, the “corrosive” effect of such a “misinterpret[ation]” of the settlement would be “catastrophic.”

Merrill Lynch, whose personnel appeared before the grand jury in 1996 and 1997 to answer questions about the company’s possible role in Orange County’s $ 1.67 billion bankruptcy, argued that the transcripts should remain secret in order to preserve the reputation of “exonerated parties.” The court rejected this argument, noting that because the investigation was terminated before the grand jury deliberated, “no one was exonerated.”

Orange County Superior Court Judge David Carter granted the media’s request for access to the transcripts last July, and Merrill Lynch appealed. (In Re Request for Transcripts of Phase Three Grand Jury Proceedings; Media Counsel: Kelli Sager, Los Angeles)