According to Merrill Lynch & Co., Inc.’s RM 10-Q for the quarterly period ended September 28, 2007, on August 14, 2007, plaintiffs filed amended class action complaints that seek to address the issues raised by the Second Circuit Court of Appeals December 5, 2006, decision denying class certification. Plaintiffs are seeking class certification in connection with the amended complaints, and defendants are opposing those efforts.
As summarized byMerrill Lynch & Co., Inc.’s FORM 10-K for the fiscal year ended December 30, 2005, Merrill Lynch has been named as one of the defendants in approximately 110 securities class action complaints alleging that dozens of underwriting defendants, including Merrill Lynch, artificially inflated and maintained the stock prices of the relevant securities by creating an artificially high aftermarket demand for shares. On October 13, 2004, the district court, having previously denied defendants’ motions to dismiss, issued an order allowing certain of these cases to proceed against the underwriters as class actions. On June 30, 2005, the United States Court of Appeals for the Second Circuit entered an order agreeing to review the district court’s order granting plaintiffs’ motion for class certification. The matter has now been fully briefed, and the parties are awaiting a decision from the Court of Appeals.
The complaint alleges that the Registration Statement filed with the SEC on February 24, 2000 for the issuance and initial public offering (IPO) of one million Depository Receipts called B2B Internet Holdrs depositary receipts contained material misrepresentation and/or omissions. The complaint further alleges that the B2B Internet Holdrs depositary receipts were "basket securities" whose price was directly related to, and moved with, the price of 20 underlying securities held in the B2B Internet Holdrs trust. The complaint further alleges that defendants violated the federal securities laws by issuing and selling B2B Internet Holdrs Depositary Receipts, in an IPO on February 23, 2000, pursuant to a registration statement and prospectus that were materially false and misleading because they failed to disclose that a substantial proportion of the B2B Internet Holdrs trust's initial portfolio consisted of stocks whose prices had been artificially inflated through the use of improper practices relating to their initial public offering, and that they therefore traded at artificially inflated prices. The price of B2B Internet Holdrs has fallen from a March 14, 2000 high of $108 per B2B Internet Holdr to a low of $4.26 on April 3, 2001.