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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: mmmary who wrote (76469)	5/24/2002 1:43:49 PM
From: Baldur Fjvlnisson	Respond to of 122087

Merrill hit by first wave of class actions US$100M a drop in bucket?: Investors coming out of woodwork to seek redress nationalpost.com Sinclair Stewart Financial Post, with files from Agence France Presse and Dow Jones Merrill Lynch & Co., bruised but not beaten following a much publicized dogfight with New York Attorney General Eliot Spitzer, is now bracing itself for an even more formidable foe -- legions of angry investors who feel they were duped by the brokerage's research team. A class action lawsuit was filed in New York yesterday on behalf of purchasers of the Merrill Lynch Internet Strategies Fund, the first volley in what many expect will be a protracted barrage of litigation against the embattled firm. The complaint, filed by Schiffrin and Barroway, charges that the investment house failed to disclose material conflicts of interest, and accused it of making "false and misleading" statements about Internet stocks in order to win corporate finance business. Mr. Spitzer had unearthed e-mails in which the firm's analysts privately trashed stocks as "junk" that they were publicly recommending. Earlier this week, Merrill agreed to issue an apology and pay US$100-million in penalties to settle the allegations, although as part of the agreement it did not admit any wrongdoing. "The US$100-million would be a drop in the bucket if liability was found for putting out what can be alleged to be fraudulent analyst reports," said Jeffrey Zwerling of Zwerling, Schachter & Zwerling LLP, a New York law firm specializing in class action suits. Mr. Zwerling said Merrill Lynch might have "taken a lot of steam" out of class action litigation if it had created a pool of money for investors, who are now coming out of the woodwork with private actions. He said his firm has already been retained by two clients, and is investigating two others. "The worst isn't over ... in terms of monetary exposure, because the trading in some of these companies was extensive. The losses are monumental." Brent Alcala, a lawyer in San Francisco, said Merrill could have a difficult time dodging miffed investors who will not receive any of the US$100-million settlement. "Merrill Lynch will find it hard to ignore the massive publicity surrounding its analysts' behaviour and the public disclosure of the damaging e-mails from its analysts who privately disparaged the very same technology stocks that the brokerage firm was pushing to its customers," he said. Mr. Alcala, who is launching a "low seven-figure" suit against the firm on behalf of a pair of aggrieved clients, said he envisions suits directed at either Merrill Lynch, its various funds, or against the analysts themselves. He said many investors will face an uphill battle trying to obtain class action status, and instead may choose to sue the brokerage on an individual basis. "I think each case is unique, and it's not a slam dunk here," he said. "It's tough to prove these types of cases. What's going to happen is a lot of the really strong cases are just going to settle. You're not going to hear anything about them." Mr. Alcala added probes of other Wall Street firms could follow, and described the controversy as "the tip of the proverbial iceberg."