Merrill Lynch agreed to reimburse a Massachusetts city almost $14m (€9.4m) after the bank determined it had acted without the city’s consent when it invested in risky collateralized debt obligations, but was still sued.

Springfield originally hired Merrill Lynch to invest $50m of its budget surplus last year and the bank invested $13.9m in three different collateralized debt obligations it had underwritten which plummeted in value.