WASHINGTON - Merrill Lynch & Co. on Friday agreed to a preliminary settlement-in-principle over auction-rate securities with the Securities and Exchange Commission that would enable investors who purchased ARS from the firm to receive a total of up to $7 billion to restore their losses and liquidity.

The settlement with the SEC came one day after the firm, along with Goldman Sachs Group Inc. and Deutsche Bank AG, reached similar ARS agreements with New York Attorney General Andrew Cuomo and other state regulators, under which they agreed to reimburse municipal issuers for all refinancing fees on ARS issued between Aug. 1, 2007, and when the auctions failed in mid-February.

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