On September 5, 2007, the Court issued the Opinion and Order No. 95140. According to the Order, U.S. District Judge John F. Keenan certified the class action and approved the settlement, approved the Plan of Allocation and finalized the award of attorneys’ fees and expenses. On September 19, 2007, the Court entered the Order and Final Judgment for In re Merrill Lynch Research Reports Securities Litigation, 02 MDL 1484.
According to the Notice of Pendency and Proposed Settlement of Class Actions, dated March 19, 2007, for In re Merrill Lynch Research Reports Securities Litigation, 02 MDL 1484, this case, In re Merrill Lynch & Co. Aether Systems Inc. Research Reports Sec. Litig., 02-CV-3429, is part of a proposed settlement of $125 million in cash. A settlement hearing will be held before the Honorable John F. Keenan, United States District Judge of the Southern District of New York to determine whether the settlement should be approved.
On December 19, 2002, the Court entered the Case Management Order #1. According to the Order, the actions filed on behalf of purchasers of the common stock of Aether Systems Inc. were consolidated and now carried out under In re Merrill Lynch & Co., Inc. Aether Systems Inc. Research Reports Securities Litigation, 02-CV-3429 (MP). On March 14, 2003, an Amended Complaint was filed and the defendants responded by filing a motion to dismiss. On June 2, 2006, the Court entered the Minute Order signed by Judge Michael B. Mukasey administratively closing the case pursuant to Memorandum from the Administrative Office of the United States Courts dated June 15th, 1973.
In October 2002, the Judicial Panel on Multidistrict Litigation granted the Merrill Lynch Defendants’ motion to transfer all such cases to the Southern District of New York for coordinated pre-trial proceedings. The cases were transferred to the Honorable Milton Pollack, Senior United States District Judge, and were coordinated under the caption In re Merrill Lynch Research Reports Securities Litigation, 02 MDL 1484.
The Complaint alleges that to maintain and enhance Merrill Lynch's investment banking relationships with Aether, defendants issued analyst reports with positive ratings on Aether which were materially misleading as they were inconsistent with their own contemporaneous, private adverse assessments of Aether. For example, defendants were repeatedly issuing a short-term accumulate, long-term buy rating on Aether despite their internal e-mails that Aether stock had horrible fundamentals.
The lawsuit charges that during the Class Period, defendants' research reports and ratings on Aether were neither independent nor objective, but instead were biased and improperly influenced by Merrill Lynch's lucrative investment banking relationships with this important client. It is also alleged that at the time defendants were issuing positive ratings and coverage about Aether, they were concealing their contemporaneous, private negative assessments of the Company. Indeed, Merrill Lynch's research reports on Aether were so tainted that Blodget
internally acknowledged, in a December 1, 2000 e-mail, the need to "just start calling the stocks..., including AETH (Aether) like we see them, no matter what the ancillary business consequences are." Plaintiff asserts that despite this telling concession, neither Blodget nor the other defendants started calling Aether stock as they saw it.
The Complaint further alleges that defendants failed to disclose that although Merrill Lynch technically had five ratings, it had a policy and practice of assigning only its top three ratings (buy, accumulate, and neutral) to Internet companies. During the relevant time herein, defendants not once issued Merrill Lynch's two lowest ratings -- reduce or sell -- on such companies, including Aether. As a result of defendants' false and misleading statements, the market price of Aether common stock was artificially inflated, maintained or stabilized during the Class Period.