Manhattan Judge Dismisses Possibility Of New Suit Against Merrill Lynch

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

14 August 2003

In a 20 page opinion published on Tuesday, Southern District of New York senior judge, Milton Pollack denied a request to file a new complaint from investors who claim that investment bank, Merrill Lynch boosted the stock prices of two internet firms by issuing misleading research reports.

In his initial ruling on June 30, 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 that:

'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.'

Despite this vehement dismissal of their case, the plaintiffs asked Judge Pollack to reconsider the ruling in light of a new argument on the one year statute of limitations in such cases, citing the July 7 Second US Circuit Court of Appeals ruling in Newman v. Warnaco Group Inc.

However, the judge responded by observing on Tuesday that:

'The plethora of public information would have required a blind, deaf or indifferent investor to take notice of the purported alleged 'fraud'. Every investor of reasonable intelligence would have been absolutely on inquiry notice.'

He then quoted extracts from several news articles published 'well before' the internet bubble burst in early 2000, as evidence that 'abundant material was in the public domain regarding the existence of widespread investment banking conflicts of interest and allegedly inflated buy ratings in Wall Street stock research related to new IPOs and technology companies.'

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