Unreal people lose billions of $$,and these guys walk around free with a slap on the hand, while others go to prisons,for a long time.Great system huh?
"The fact that part of Merrill Lynch analysts' compensation was based upon the
performance of the investment banking division is a blatant conflict of interest
that was never disclosed to clients," said Pearce. "Individual investors across
the country lost billions of dollars because Merrill Lynch and other firms used
analysts to pad their own pockets and benefit their investment banking clients
instead of their retail clients.",
(COMTEX) B: Merrill Lynch Found Guilty of Intentional Misconduct With Rega
d to Analysts' Stock Ratings - Merrill Lynch Ordered
B: Merrill Lynch Found Guilty of Intentional Misconduct With Regard to Analysts'
Stock Ratings - Merrill Lynch Ordered to Pay More Than $1 Million Including Puni
ive Damages - - Award on Stocks Not Covered by New York Attorney General Elliott
Spitzer's Investigation - ( PRNewswire )
BOCA RATON, Fla., Feb 28, 2005 /PRNewswire via COMTEX/ -- Merrill Lynch,
Pierce, Fenner & Smith, Inc. (Merrill Lynch) has been ordered by an arbitration
panel of the National Association of Securities Dealers, Inc. (NASD) to pay more
than $1 million to Gary and Lisa Friedman, including punitive damages, on the
Friedmans' claim that Merrill Lynch hid conflicts of interest and issued
fraudulent analyst reports and ratings in order to boost the firm's investment
banking revenue.
According to the award, the arbitration panel found "clear and convincing
evidence" that Merrill Lynch was "guilty of intentional misconduct in that they
had actual knowledge that many of the companies for which they were issuing
and/or maintaining ratings of 1, 2 or 3 during the relevant period of time were,
in reality, overvalued by this rating system." Further the panel found that
Merrill Lynch manager, "knowingly condoned, ratified and consented to the
conduct of its employees."
The Friedmans were represented by Boca Raton, Florida securities attorney Robert
W. Pearce who argued that all of Merrill Lynch's research analysts were
conflicted by the firm's flawed business model.
The Friedmans, who did not own any of the securities identified in New York
Attorney General Elliott Spitzer's investigation or the global settlement
reached with Wall Street firms in 2003 (see endnote for list of securities in
the Friedmans' portfolio), received a seven-figure award with Mr. Pearce's
assistance.
"The Merrill Lynch fraud was not limited to its Internet sector research
analysts," said Pearce. "It was clear that Merrill Lynch used all of its
analysts, securities reports and ratings as marketing vehicles to bolster its
investment banking business."
This ruling also represents one of few cases in which punitive damages have been
awarded in any analyst case and is one of the rare instances in which a $1
million+ award has been issued.
"This is the largest punitive damage award we have seen in a research analyst
case and has significant findings of fact," said Rick Ryder, publisher of
Securities Arbitration Commentator, Maplewood, NJ, which tracks awards in the
securities industry. "This case will provide encouragement to investors who have
filed similar claims to pursue them. It also creates a path for others to follow
regarding how to prepare and present a compelling research analyst case."
Pearce stipulated this was a pure Merrill Lynch research analyst conflict-
of-interest case and that there were no other issues involved.
"The fact that part of Merrill Lynch analysts' compensation was based upon the
performance of the investment banking division is a blatant conflict of interest
that was never disclosed to clients," said Pearce. "Individual investors across
the country lost billions of dollars because Merrill Lynch and other firms used
analysts to pad their own pockets and benefit their investment banking clients
instead of their retail clients." |
