Merrill Lynch & Co., Inc. : Auction Rate Securities

Company and Case Information

IMPORTANT INFORMATION | INDEX OF FILINGS | SEARCH

Home

Index of Filings

News and Press Releases

Filings

Decisions

Settlements

Litigation Activity Indices

Top Ten List

Annual/Quarterly Updates

Clearinghouse Research

Articles & Papers

Search

Related Sites

About Us

Local Rules

Sponsors

Register

_______________
Copyright (c) 2001
Stanford Law School

Merrill Lynch & Co., Inc. : Auction Rate Securities Summary: The original Complaint alleges that Merrill Lynch violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by deceiving investors about the investment characteristics of auction rate securities and the auction market in which these securities traded. Auction rate securities are either municipal or corporate debt securities or preferred stocks which pay interest at rates set at periodic “auctions.” Auction rate securities generally have long-term maturities or no maturity dates.

The Complaint alleges that, pursuant to uniform sales materials and top-down management directives, Merrill Lynch offered and sold auction rate securities to the public as highly liquid cash-management vehicles and as suitable alternatives to money market mutual funds. According to the Complaint, holders of auction rate securities sold by Merrill Lynch and other broker-dealers have been unable to liquidate their positions in these securities following the decision on February 13, 2008 of all major broker-dealers including Merrill Lynch to “withdraw their support” for the periodic auctions at which the interest rates paid on auction rates securities are set.

The Complaint alleges that Merrill Lynch failed to disclose the following material facts about the auction rate securities it sold to the class: (1) the auction rate securities were not cash alternatives, like money market funds, but were instead, complex, long-term financial instruments with 30 year maturity dates, or longer; (2) the auction rate securities were only liquid at the time of sale because Merrill Lynch and other broker-dealers were artificially supporting and manipulating the auction rate market to maintain the appearance of liquidity and stability; (3) Merrill Lynch and other broker-dealers routinely intervened in auctions for their own benefit, to set rates and prevent all-hold auctions and failed auctions; and (4) Merrill Lynch continued to market auction rate securities as liquid investments after it had determined that it and other broker dealers were likely to withdraw their support for the periodic auctions and that a “freeze” of the market for auction rate securities would result.

On October 31, 2008, Judge Loretta A. Preska consolidated the actions under the caption In re Merrill Lynch Auction Rate Securities Litigation, Master Case File No. 08-cv-3037 (LAP). Further, Judge Preska appointed Gerald Wendel and Robert Berzin as lead plaintiffs and approved the lead plaintiffs' selection of Girard Gibbs LLP as lead counsel for the class. On December 10, 2008, the lead plaintiffs filed a Consolidated Class Action Complaint. The defendants responded by filing a motion to dismiss the Consolidated Class Action Complaint. Before any ruling, the plaintiffs again amended their complaint and filed a First Amended Consolidated Class Action Complaint. On June 12, 2009, the case was accepted as related and coordinated with Multidistrict Litigation, 1:09-md-02030-LAP. On June 19, 2009, Gerald Wendel and Robert Berzin withdrew as lead plaintiffs and were replaced with Plaintiffs Colin Wilson, Ronald Levy, and Michael Bonde. On July 24, 2009, the defendants filed a motion to dismiss the First Amended Consolidated Class Action Complaint. On March 31, 2010, Judge Loretta A. Preska granted the defendants’ motion to dismiss and dismissed the action with prejudice. The Clerk’s Judgment was entered and the case closed. All pending motions have been denied as moot.

On April 22, 2010, the plaintiffs filed a Notice of Appeal in the Second Circuit Court of Appeals.

According to a press release dated November 14, 2011, in the first decision of its kind stemming from class action litigation over the collapse of the auction-rate securities market, a federal appeals court panel in New York ruled Monday that Merrill Lynch & Co. had adequately disclosed to customers that it was preventing auctions from failing. The U.S. Court of Appeals for the Second Circuit rejected a bid to reinstate a securities fraud class-action suit filed by investors against Merrill Lynch, now Bank of America Merrill Lynch. A lower court dismissed the case last year after deciding Merrill’s disclosures were sufficient. The appeals court’s affirmation of the lower court’s ruling is a blow to the Securities and Exchange Commission, which had urged the suit be reinstated. The case had pitted the SEC against the Securities Industry and Financial Markets Association in friend-of-the-court briefs. But in its 33-page decision in Colin Wilson v. Merrill Lynch, the three-judge panel concluded “the conduct alleged to be manipulative was sufficiently disclosed to market participants so as to preclude plaintiff’s claim.”

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

COMPANY/ISSUER NAME:	Merrill Lynch & Co., Inc.
COMPANY/ISSUER TICKER:	MER
COMPANY WEBSITE:	http://www.ml.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Frederick Burton, et al. v. Merrill Lynch & Co., Inc., et al.

COURT: S.D. New York	DOCKET NUMBER: 08-CV-03037
JUDGE NAME: Hon. Loretta A. Preska
DATE FILED: 03/25/2008	SOURCE: Notice of Filing
CLASS PERIOD START: 03/25/2003	CLASS PERIOD END: 02/13/2008
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Girard Gibbs LLP (San Francisco) 601 California Street, Suite 1400, San Francisco, CA, 94108 (voice) 415.981.4800, (fax) 415.981.4846, mail@girardgibbs.com Seeger Weiss LLP (New York) One William Street, New York, NY, 10004 (voice) 212.584.0700, (fax) , info@seegerweiss.com Stueve Siegel Hanson LLP 460 Nichols Road, Suite 200, Kansas City, MI, 64112 (voice) 816.714.7100, (fax) 816.714.7101, info@stuevesiegel.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 3

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint for Violations of Federal Securities Laws - Jury Trial Demanded
Type: Complaint		Date on the document: 3/25/2008
Stipulation And Order Consolidating Actions, Appointing Lead Plaintiffs And Approving Their Selection Of Lead Counsel
Type: Order Appointing LP/LC		Date on the document: 10/31/2008

REFERENCE COMPLAINT

In re Merrill Lynch Auction Rate Securities Litigation

COURT: S.D. New York	DOCKET NUMBER: 08-CV-03037
JUDGE NAME:
DATE FILED: 05/22/2009	SOURCE: Docket
CLASS PERIOD START: 03/25/2003	CLASS PERIOD END: 02/13/2008
TYPE OF COMPLAINT: First Amended and Consolidated
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Girard Gibbs LLP (San Francisco) 601 California Street, Suite 1400, San Francisco, CA, 94108 (voice) 415.981.4800, (fax) 415.981.4846, mail@girardgibbs.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 1

DOCUMENTS FOR THE REFERENCE COMPLAINT
Consolidated Class Action Complaint For Violations Of The Federal Securities Laws
Type: Complaint		Date on the document: 12/10/2008
First Amended Consolidated Class Action Complaint For Violations Of The Federal Securities Laws
Type: Complaint		Date on the document: 05/22/2009
Transfer Order
Type: Court Transfer Order		Date on the document: 06/12/2009
Order Granting Withdrawal And Substitution Of Lead Plaintiff
Type: Order Appointing LP/LC		Date on the document: 06/19/2009
Opinion And Order
Type: Order		Date on the document: 03/31/2010
Plaintiff's Notice Of Appeal
Type: Notice of Appeal		Date on the document: 04/22/2010
Judgment
Type: Summary Judgment		Date on the document: 01/09/2012
U.S. District Court Civil Docket
Type: Docket		Date on the document: 01/09/2012

OTHER DOCUMENTS
Class Action Complaint for Violations of Federal Securities Laws - Jury Trial Demanded
Case Name and/or Number: Richard Stanton, et al. v. Merrill Lynch & Co., Inc., et al.
Type: Complaint		Date on the document: 3/26/2008
Class Action Complaint
Case Name and/or Number: Frederick Burton, et al. v. Merrill Lynch & Co., Inc., et al.
Type: Complaint		Date on the document: 01/23/2009
U.S. District Court Civil Docket
Case Name and/or Number: In Re: Merrill Lynch & Co., Inc., Auction Rate Securities (ARS) Marketing Litigation
Type: Docket		Date on the document: 03/31/2010

WARNING AND DISCLAIMER OF LIABILITY:
The information included on this Web site, whether provided by personnel employed by Stanford Law School or by third parties, is provided for research and teaching purposes only. Neither Stanford University, Stanford Law School, nor any of their employees, agents, contractors, or affiliates warrant the accuracy or completeness of the information or analyses displayed herein, and we caution all readers that inclusion of any information on this site does not constitute an endorsement of the truthfulness or accuracy of that information. In particular, this Web site contains complaints and other documents filed in federal and state courts, which make allegations that may or may not be accurate. No reader should, on the basis of information contained in or referenced by this Web site, assume that any of these allegations are truthful.

Go to Search page | Go to Case Index page | Back to Top

�