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Case Status:    SETTLED
On or around 11/02/2010 (Date of order of distribution of settlement)

Filing Date: December 23, 2002

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.

As summarized by the Notice of Pendency dated October 11, 2006, on or about August 25, 2003, the Focus Twenty Fund Lead Plaintiff filed a consolidated amended class action complaint, making essentially the same allegations as made in the Global Technology Fund Complaint by the Global Technology Fund Lead Plaintiff. The Focus Twenty Fund Defendants subsequently moved to dismiss the Focus Twenty Fund Complaint on the basis of the District Court's decisions in the coordinated cases, particularly the decisions on essentially the same grounds as in the Global Technology Fund action. In its October 22, 2003 decision on Defendants’ motions to dismiss, the Court struck certain allegations as irrelevant and dismissed, without prejudice, those portions of the Amended Complaint that were not stricken. The Focus Twenty Fund Lead Plaintiff filed his Second Amended Complaint on November 5, 2003 which Defendants moved to dismiss. That motion was fully briefed and was awaiting oral argument at the time the parties reached this proposed settlement.

This case is part of the Master file, In Re Merrill Lynch & Co., Inc Research Reports Securities Litigation: 02 MDL 1484. According to the Case Management Order No. 5, several cases were consolidated under In Re Merrill Lynch Focus Twenty
Fund, Inc. Securities Litigation, 02cv10221(MP).

The lawsuit alleges that the relationships among the defendants include that the defendants are: (1) the underwriters for the common stock of certain of the companies in the Focus Twenty Fund's portfolio; (2) the investment bankers and corporate finance specialists for certain of the companies whose securities are in the Fund's portfolio; (3) seeking to obtain additional investment banking business from these present and former clients and from other companies whose shares also were/are in the Fund's portfolio; (4) the issuers of the shares in the Fund; (5) preparing and publicly disseminating research reports and recommendations on many of the companies whose shares were in the Fund's portfolio; and (6) the broker for certain members of the Class.

This action arises as a result of the issuance by the defendants of shares in the Fund, and concerns material misstatements and omissions by defendants in the Prospectus and other incorporated documents, relating to defendants' conflicts of interest, which include but are not limited to the following: (1) defendants failed to disclose and omitted material information that Merrill Lynch had had investment banking relationships with, including having brought public, certain of the companies whose securities were part of the Fund's portfolio. Defendants disclosed neither this general fact nor the identities of the particular companies with which it had investment banking relationships. (2) defendants failed to disclose and omitted material information concerning that Merrill Lynch was continuing to seek investment banking relationships with many of the companies whose securities were part of the Fund's portfolio; and (3) defendants failed to disclose and omitted material information concerning that a material part of the total compensation paid to Merrill Lynch research analysts was based upon obtaining investment banking business for Merrill Lynch and not upon the accuracy of their research about a given company. Hence, Merrill Lynch and its affiliated companies including the Fund recommended investments in and/or invested in companies in order to enhance Merrill Lynch's opportunity to obtain investment banking business from those companies (without regard to whether they were good investments for the investors including plaintiffs and the Class).

COMPANY INFORMATION:

Sector: Financial
Industry: Misc. Financial Services
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: MAFOX
Company Market: Open-end Fund
Market Status: Unknown

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: S.D. New York
DOCKET #: 02-CV-10221
JUDGE: Hon. Milton Pollack
DATE FILED: 12/23/2002
CLASS PERIOD START: 03/03/2000
CLASS PERIOD END: 12/23/2002
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Law Offices of Charles J. Piven, P.A.
  2. Wolf Haldenstein Adler Freeman & Herz LLP (New York)
No Document Title Filing Date
COURT: S.D. New York
DOCKET #: 02-CV-10221
JUDGE: Hon. Milton Pollack
DATE FILED: 11/05/2003
CLASS PERIOD START: 03/03/2002
CLASS PERIOD END: 12/23/2002
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Abbey Gardy, LLP (New York)
  2. Beatie & Osborne LLP
  3. Berger & Montague PC
  4. Cohen, Milstein, Hausfeld & Toll, P.L.L.C. (Washington, DC)
  5. Finkelstein, Thompson & Loughran
  6. Kaplan Fox & Kilsheimer, LLP (former New York, NY)
  7. Much Shelist Freed Denenberg Ament & Rubenstein, PC
  8. Pomerantz LLP (New York)
  9. Rabin & Peckel LLP
  10. Shapiro Haber & Urmy LLP (Boston)
  11. Weiss & Yourman (New York, NY)
  12. Wolf Haldenstein Adler Freeman & Herz LLP (New York)
No Document Title Filing Date
No Document Title Filing Date