Merrill Lynch, in a bid to slash its exposure to risky mortgage-backed securities, has engaged in deals with hedge funds that may have been designed to delay the day of reckoning on losses, reports the Wall Street Journal. The transactions are among the issues likely to be examined by the SEC. In one deal, a hedge fund bought $1bn in commercial paper issued by a Merrill-related entity containing mortgages. In exchange, the hedge fund had the right to sell back the commercial paper to Merrill itself after one year for a guaranteed minimum return, the story says
