Investors Defeated In Alleged 'Biased Research' Claim Against Merrill Lynch

by Glen Shapiro, LawAndTax-News.com, New York

10 February 2005

In a decision issued late last month, the US Court of Appeals for the 2nd Circuit found that allegedly biased research issued by Merrill Lynch & Co. before the collapse of the dot com bubble was not responsible for the losses of investors in high tech firms such as 24/7 Real Media Inc. and Interliant Inc.

Ruling in 2003 on the 140 shareholder suits filed against Merrill Lynch following allegations that the firm had issued favourable reports on certain firms in order to cultivate investment banking business, US District Judge Milton Pollack argued that the investors had failed to prove the "causal link" between the alleged misconduct and their losses.

In his initial ruling on June 30, 2003, Judge Pollack announced that:

"At the times here involved, the stock markets were in the throes of a colossal 'bubble' of panic proportions. Speculators abounded to capitalize on the opportunities presented by this bubble."

He went on to add:

"Seeking to lay the blame for the enormous internet bubble solely at the feet of a single actor, Merrill Lynch, plaintiffs would have this court conclude that the federal securities laws were meant to underwrite, subsidize, and encourage their rash speculation in joining a freewheeling casino that lured thousands obssessed with the fantasy of Olympian riches, but which delivered such riches to only a scant handful of lucky winners."

The Appeals Court supported this decision in late January of this year. However, according to reports it did reverse the statute-of-limitations holding issued by Judge Pollack.

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