Merrill Lynch & Co., Inc. : Internet Strategies Fund

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_______________
Copyright (c) 2001
Stanford Law School

Merrill Lynch & Co., Inc. : Internet Strategies Fund Conclusion: According to a press release dated February 1, 2007, Merrill Lynch & Co. won approval Wednesday of a $40.3-million settlement of three lawsuits over claims it provided misleading analyst research about Internet companies. U.S. District Judge John Keenan in New York approved the deal reached after investors appealed the 2003 dismissal of two of the cases. Keenan also awarded $9 million to lawyers who represented almost 400,000 investors who sued. Investors won 6.25% of the $645 million in damages they sought, which Keenan said was "at the higher end" of the percentage of recoveries in class - action securities suits. The lawsuits were brought on behalf of shareholders in three Merrill mutual funds: the Internet Strategies Fund, the Global Technology Fund and the Focus Twenty Fund. The firm issued falsely optimistic research reports, and fund prospectuses failed to disclose investments in companies with which Merrill sought banking business, the investors claimed. Merrill was named in dozens of investor lawsuits in 2002 after the firm issued what the investors said were misleading research reports about Internet companies. U.S. District Judge Milton Pollack, who died in 2004, dismissed many of the actions, saying the individuals who sued were "high-risk speculators" who wanted to "twist the securities laws into a scheme of cost-free speculators' insurance." An appeals court upheld most of the dismissals. In February 2006, Merrill paid $164 million to settle 12 cases pending in the trial court and 11 on appeal.

On December 24, 2002, the Court entered the Case Management Order #1 consolidating several related actions under In re Merrill Lynch & Co., Inc. Internet Strategies Fund Securities Litigation, 02-CV-3176(MP). A Master file was established under In Re Merrill Lynch & Co., Inc Research Reports Securities Litigation: 02 MDL 1484. On March 14, 2003, an Amended Complaint was filed. On November 17, 2003, the Court entered the Order No. 22 dismissing the Plaintiff's Consolidated Amended Complaint in its entirety, with prejudice. On February 4, 2004, the plaintiffs filed an Amended Notice of Appeal. On November 6, 2006, the Court entered the Mandate of the U.S. Court of Appeals withdrawing the appeal because a settlement was reached in the Multidistrict Litigation action, 02-MD-1484. According to the Notice of Pendency dated October 11, 2006, the settlement fund is in the amount of $39 million in cash.

The complaint alleges that the defendants engaged in a scheme that was intended to use Blodget's strong reputation and bullish ratings on Internet stocks to market the Internet Strategies Fund to unsuspecting investors. In fact, as a result of defendants' scheme, over one billion dollars was invested in the Internet Strategies Fund by investors. The complaint alleges that defendants failed to disclose: [1] that at the same time Blodget was recommending Internet stocks he held unpublished negative views regarding those same stocks [2] that considerable conflicts of interest existed within Merrill Lynch which compromised the objectivity of Merrill Lynch Internet analysts and [3] that Blodget's favorable ratings on Internet companies were influenced by Merrill Lynch's desire to generate investment banking fees. The complaint further alleges that the Internet Strategies Fund's Registration Statement/Prospectus was materially false and misleading because, among other things, it [1] omitted to state that the Internet Strategies Fund was being marketed at a time when Merrill Lynch Internet analysts published strong investment ratings on all Internet companies followed by Merrill Lynch even though those analysts, including Blodget, held negative personal views on those same stocks [2] omitted to state that Blodget and the Internet Group published strong ratings on Internet stocks in order to secure investment banking business and [3] omitted to state that substantial conflicts of interest existed within Merrill Lynch that compromised the objectivity of Blodget and the Internet Group.

INDUSTRY CLASSIFICATION:
SIC Code: 6211
Sector: Financial
Industry: Investment Services

COMPANY/ISSUER NAME:	Internet Strategies Fund
COMPANY/ISSUER TICKER:	MER
COMPANY WEBSITE:	http://www.ml.com/

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Sherman, et al. v. Merrill Lynch & Co., Inc., et al.

COURT: S.D. New York	DOCKET NUMBER: 02-CV-03176
JUDGE NAME: Hon. Milton Pollack
DATE FILED: 04/24/2002	SOURCE: Business Wires
CLASS PERIOD START: 03/14/2000	CLASS PERIOD END: 10/15/2001
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Wolf Popper, LLP 845 Third Avenue, New York, NY, 10022-6689Ave (voice) 877.370.7703, (fax) 212.486.2093, IRRep@wolfpopper.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 1

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint - Jury Trial Demanded
Type: Complaint		Date on the document: 04/24/2002

REFERENCE COMPLAINT

In Re: Merrill Lynch & Co., Inc. Internet Strategies Fund Research Reports Securities Litigation

COURT: S.D. New York	DOCKET NUMBER: 02-CV-03176
JUDGE NAME: Hon. Milton Pollack
DATE FILED: 03/14/2003	SOURCE: Business Wires
CLASS PERIOD START: 03/14/2000	CLASS PERIOD END: 10/15/2001
TYPE OF COMPLAINT: Consolidated Complaint
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Abbey Gardy, LLP (New York) 212 East 39th Street, New York, NY, 10016 (voice) 212.889.3700, (fax) , info@abbeygardy.com Abbey Spanier Rodd Abrams & Paradis, LLP (New York) 212 East 39th Street, New York, NY, 10016 (voice) 212-889-3700, (fax) 212-684-519, info@abbeyspanier.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 2

DOCUMENTS FOR THE REFERENCE COMPLAINT
On Motion to Dismiss
Type: Order		Date on the document: 10/29/2003
Notice Of Pendency Of Class Action And Proposed Settlement
Type: Notice		Date on the document: 10/11/2006
Proof of Claim and Release
Type: Other		Date on the document: 10/11/2006
U.S. District Court Civil Docket
Type: Docket		Date on the document: 11/13/2007

OTHER DOCUMENTS
Class Action Complaint
Case Name and/or Number: Gordon, et al. v. Merrill Lynch & Co., Inc., et al.
Type: Complaint		Date on the document: 05/02/2002
Class Action Complaint For Violation Of Federal Securities Laws
Case Name and/or Number: Sabin
Type: Complaint		Date on the document: 06/18/2002
Case Management Order No. 3
Case Name and/or Number: In Re: Merrill Lynch & Co., Inc. Internet Strategies Fund Research Reports Securities Litigation
Type: Order		Date on the document: 02/05/2003
U.S. District Court Civil Docket
Case Name and/or Number: Gordon, et al. v. Merrill Lynch & Co., Inc., et al.
Type: Docket		Date on the document: 10/29/2003

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