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| 2001 News and Press Releases |
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HEADLINE ARCHIVED:
Suit On Stock Fees Heads To State Court
By: Mark Hamblett
New York Law Journal. Tuesday, October 16, 2001
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Excerpt: REPRESENTATIONS concerning transaction fees for purchasing securities are not considered statements made "in connection with" the purchase or sale of a securities, a Southern District judge has ruled. Deciding an issue that has yet to be addressed by the U.S. Court of Appeals for the Second Circuit, Judge Denise Cote remanded a case against Merrill Lynch to state court after finding that transaction fees have an insufficient connection to the underlying securities to allow the case to be removed to federal court. The fees at issue in Spielman v. Merrill Lynch, Pierce, Fenner & Smith Inc., 01 CIV. 3013, concerned one of a series of securities offerings the company made to customers for its Cash Management Accounts. Merrill Lynch marketed the accounts, in part, as a way for customers to buy certain securities without having to pay a transaction fee. Among the securities offered to accountholders were "Holding Company Depository Receipts," (HOLDRS), which were shares of the common stock of 20 different companies from a variety of industry sectors.
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