Rare coins costly for Merrill

NEW YORK - Many's the punter who's been burned in the highly specialised market for rare coins. But it's rare indeed that the world's largest securities firm should find itself in similar straits, writes Larry Black.

Merrill Lynch said yesterday it would reimburse 3,500 investors for their entire stake in three numismatic and antiquities partnerships the firm sponsored in the late 1980s - Merrill's first, and probably its last, venture into the market. The firm expects to pay out between dollars 25m and dollars 30m ( pounds 17m- pounds 20m) to the investors, waiving all fees and commissions and absorbing the losses suffered by the partnerships, the largest of which is now worth only 40 per cent of its original value. A Merrill spokesman said the firm was liquidating the funds' assets 'to recover whatever value remains'.

The three funds - Athena I and II, and the Numismatic Fine Arts World Coin Fund - were managed by Bruce McNall, a high- flying Los Angeles rarities dealer who unexpectedly filed for bankruptcy earlier this summer amid reports that he is being investigated for alleged bank fraud. Mr McNall is being sued by three European banks that claim he owes them dollars 160m.

The Wall Street Journal reported yesterday that Merrill told investors last month that some 400 coins - worth dollars 3.3m - were missing from the Numismatic partnership. But even before the coins disappeared, the value of a dollars 1,000 share in the Athena II fund - which actually paid out dollars 131 in 'profits' on each share in the early 1990s - had fallen to dollars 260.