May 21, 1999

                   CFTC Charges Merrill Lynch
                   In Sumitomo Copper Scandal

                   By CHARLES GASPARINO
                   Staff Reporter of THE WALL STREET JOURNAL

                   The Commodity Futures Trading Commission, capping a three-year
                   inquiry, filed a civil administrative charge against Merrill Lynch & Co.
                   involving the big securities firm's role in the 1996 Sumitomo Corp.
                   copper-trading debacle.

                                        The complaint alleges that Merrill officials
                                        "knowingly and intentionally aided, abetted
                                        and assisted the world-wide manipulation and
                                        the attempted manipulation of copper prices"
                                        by providing credit and finance to Japan's
                                        Sumitomo and to another company, Global
                                        Minerals & Metals Corp., New York.

                                        "Merrill Lynch participated in the manipulation
                                        as something it wished to bring about because
                                        Merrill Lynch earned money as copper prices
                                        rose," the complaint says.

                                        The action against Merrill is a major
                                        development in the investigation of the $2.6
                                        billion Sumitomo scandal, which rocked
                                        world-wide copper markets. The CFTC
                                        complaint alleges "that the manipulation of
                                        copper prices was the culmination of a long
                                        and deliberate scheme" by a top official at
                                        Global Minerals and Sumitomo's former chief
                                        copper trader, Yasuo Hamanaka, to acquire
                   large market positions and liquidate them at distorted and artificially high
                   prices. Mr. Hamanaka was found guilty in Tokyo of fraud and forgery
                   charges and sent to prison.

                   The CFTC also filed an administrative complaint against Global Minerals,
                   the company's president and chief executive officer, R. David Campbell,
                   and its chief copper trader Carl Alm, alleging that they manipulated and
                   cornered the copper market in late 1995.

                   "The filing of this proceeding today culminates a three-year investigation in
                   which the division uncovered what I believe is one of the most serious
                   world-wide manipulations of a commodities market encountered in the
                   25-year history of the commission," said Geoffrey Aronow, director of the
                   CFTC's enforcement division.

                                     The Copper Debacle

                   Major events in the Sumitomo Corp. copper-trading case:

                        June 1996: Amid tumult in the copper market, Sumitomo Corp.
                        stuns global traders with disclosure that it had lost $1.8 billion
                        (quickly amended to $2.6 billion) in allegedly unauthorized trades by
                        head copper trader Yasuo Hamanaka.
                        October 1996: Japanese authorities arrest Mr. Hamanaka on
                        charges he forged documents involving trades with Merrill Lynch
                        and other metals-trading firms.
                        May 1998: Sumitomo consents to pay $125 million to settle case
                        with Commodity Futures Trading Commission.
                        Thursday: CFTC files civil administrative charges against Merrill
                        Lynch, accusing it of aiding the copper debacle.

                   Merrill denied wrongdoing. In a statement, the securities firm said the
                   allegations are "without merit and the company intends to defend itself in
                   this matter." The statement also said Merrill "had no knowledge that the
                   conduct of Sumitomo, one of the world's largest companies, was unlawful
                   and Merrill Lynch had no intention to render assistance to any conduct that
                   was improper."

                   Peter Haveles, a lawyer for Global Minerals, said in a statement that the
                   complaint "is based on an Alice in Wonderland view of the facts." He
                   added that the company is "confident that the administrative law judge will
                   conclude that the complaint against [Global] and two of its officers is
                   without merit and that none of them violated the Commodity Exchange
                   Act." Mr. Campbell couldn't be reached for comment Thursday, and Mr.
                   Alm declined to comment, referring calls to Mr. Haveles.

                   In its complaint, the CFTC alleged an unnamed Merrill managing director
                   devised a plan "whereby Sumitomo and Global opened an account in the
                   name of Sumitomo," in which Global would have trading authority, but
                   which was backed by Sumitomo's credit.

                   In the spring of 1994, the complaint said, Mr. Alm, Global's chief copper
                   trader, began to purchase "long" forward copper positions on the London
                   Metal Exchange (betting that copper prices would rise), primarily through
                   a Merrill account. Martyn Phillips, a former Merrill Lynch trader,
                   discussed strategies with Mr. Alm, the complaint said, designed to "drive
                   market prices to artificially high levels." Mr. Phillips couldn't be reached for
                   comment, but a Merrill spokesman said no Merrill employee was aware of
                   or participated in the alleged manipulation.

                   Together with Sumitomo's long positions at Merrill, and also at other
                   brokers, Sumitomo and Global held 1.35 million metric tons of London
                   Metal Exchange forward copper contracts, the CFTC said.

                   In September 1994, two Merrill officials, including Flavio Bartmann, then
                   head of the firm's Global Commodities Group, met with Mr. Hamanaka
                   and his supervisor from Sumitomo, according to the complaint. Mr.
                   Bartmann wasn't named in the complaint, but the CFTC alleges that Mr.
                   Bartmann understood that Mr. Hamanaka was speculating -- not only
                   hedging -- in the copper-futures markets. Mr. Bartmann had no comment,
                   but his spokesman said that his client had "no knowledge that the conduct
                   of Sumitomo was unlawful and neither he nor anyone else at Merrill had
                   any intention to aid any conduct that was improper."

                   The CFTC complaint goes on to say that Sumitomo and Global were able
                   to acquire additional London Metal Exchange warrants by obtaining
                   additional lines of credit through Merrill, and other brokers. "In aggregate,
                   Merrill Lynch provided well over one-half billion dollars in financing to the
                   conspirators," the complaint said. It said officials at Merrill, including Paul
                   Kaju, then the managing director of Merrill's base-metals desk, "had
                   correctly concluded that Global and Sumitomo's warrant-taking operation
                   was motivated by their intention to manipulate prices and spread, not by
                   genuine commercial need, and that Global and Sumitomo were attempting
                   to manipulate, and were successfully manipulating the world's copper

                   Mr. Kaju, who is no longer with Merrill Lynch, wasn't named in the action.
                   In a statement, his lawyer Charles Stillman said: "It is noteworthy that Mr.
                   Kaju is not charged with any wrongdoing. Every step Paul Kaju took
                   dealing with [Sumitomo] and the others was designed to protect against
                   any improper activities. Mr. Kaju at all times conducted himself
                   professionally and properly."

                   While Merrill's role in the CFTC inquiry is new, last year the agency issued
                   an order against Sumitomo, which consented without admitting or denying
                   wrongdoing, to pay a total of $150 million to settle the matter.

                   The CFTC, which oversees U.S. futures markets, began its investigation of
                   Sumitomo after the company revealed in June 1996 that Mr. Hamanaka,
                   its star trader, lost nearly $3 billion in unauthorized copper trades.

                   Some analysts said the charges against Merrill appear somewhat similar to
                   those waged against the securities firm for its role in selling securities to
                   Orange County, Calif., in its 1994 derivatives debacle. Merrill eventually
                   paid over $400 million as part of a civil settlement with Orange County,
                   $30 million to resolve a criminal investigation and $2 million to resolve an
                   inquiry launched by the U.S. Securities and Exchange Commission.

                   Possible sanctions in the CFTC matter include directing respondents to
                   cease and desist from violating the Commodity Exchange Act, and civil
                   monetary penalties of no higher than $100,000 or triple the monetary gain
                   for each violation, which could cost the firm millions of dollars, people
                   close to the inquiry say. Merrill may also be forced to pay restitution to
                   market players damaged by the alleged violations, the CFTC said.

                   The CFTC said it would hold a public hearing on the charges; a hearing
                   date hasn't been set.