Oklahoma City Broker Sues Merrill Lynch on Analysts' Role
(KR Tribune 05/21 12:03:36)
By Don Mecoy, The Daily Oklahoman
Knight Ridder/Tribune Business News
May 18--An Oklahoma City stock broker has filed a class-action lawsuit
against Merrill Lynch & Co. alleging the company fed its brokers false
information about the opinions of the company's stock analysts.
The lawsuit was prompted by internal e-mails made public by the New York
attorney general that show Merrill Lynch analysts privately bad-mouthed stocks
that they publicly touted.
The company on Friday denied the claims made in the lawsuit filed in
federal court in Oklahoma City.
"We believe the claims are meritless and we intend to vigorously defend
against them," Merrill Lynch spokesman Joe Cohen said from his New York
office.
Oklahoma City attorney William Federman, who represents broker Shadi
Dabit, said the Merrill Lynch analysts' bogus recommendations damaged the
reputations of the firm's brokers and the pocketbooks of brokers and their
clients.
Dabit no longer works for Merrill Lynch, although he still is a stock
broker in Oklahoma City, Federman said. Dabit could not be reached for comment
Friday.
The lawsuit says Merrill Lynch brokers bought and sold stocks based on
the analysts' false recommendations, that the company trained and encouraged
brokers to persuade clients not to sell the stocks and that the company failed
to tell brokers of the "manipulative scheme."
"The bottom line is you need to be honest with your employees.
What Merrill Lynch did was have the employees stuck out on a limb, and
they knew what they were telling the employees was not true and they knew the
employees were passing out false information," Federman said.
"The customer loses money and the employee loses something just as
valuable and that's their reputation," he said.
New York's attorney general, Eliot Spitzer, recently won a court order
against Merrill Lynch, forcing it to disclose more information about its
analysts' research practices.
Spitzer alleges that the analysts' internal misgivings were squelched to
satisfy the company's desire for investment banking fees from the same
companies the analysts covered. Merrill Lynch has agreed to abide by the court
order, though it denies any wrongdoing.
A company spokesman earlier said the e-mails were "inappropriate," but
they have been "taken out of context."
Federman filed the lawsuit as a class-action complaint on behalf of all
current and former Merrill Lynch stock brokers. He said he has been contacted
by several other brokers interested in joining the suit.
The lawsuit says that the actual damages are more than $75,000, but
Federman said the potential payout, including punitive damages, could be
"hundreds of millions of dollars."
Based in New York, Merrill Lynch has client assets of $1.4 trillion. |
