Merrill Lynch & Co may have misled current and former employees who purchased Merrill Lynch stock for their company sponsored retirement plan about the risk profile of the CDO assets on its balance sheet.
This is a broad ranging securities class action lawsuit against Merrill Lynch & Co and certain third parties and officers and directors.
This consolidated action encompasses security fraud allegations, shareholder derivative actions and ERISA actions. This consolidated class action alleges that Merrill issued materially false and misleading statements regarding its business and financial results over a period of 8 months prior to October 2007, creating an artificially high stock price. In early October 2007, Merrill acknowledged it would have to take a $5 billion third quarter 2007 charge for mortgage and credit problems, the complaint said. "Then on Oct. 24, 2007 ... Merrill issued a press release which announced the third quarter charge would be $8 billion instead of $5 billion."
The class action complaint alleges that, during the Class Period, Merrill issued materially false and misleading statements regarding Merrill's business and financial results. Merrill had gone heavily into Collateralized Debt Obligations ("CDOs") which generated higher yields in the short term but which would be devastating to Merrill as the real estate market continued to soften and the risky loans led to losses. According to the complaint, Defendants knew or recklessly disregarded that:
(i) Merrill was more exposed to CDOs containing subprime debt than it disclosed; and
(ii) Merrill's Class Period statements were materially false due to their failure to inform the market of the ticking time bomb in Merrill's CDO portfolio due to the deteriorating subprime mortgage market, which caused Merrill's portfolio to be impaired.
In early October 2007, Merrill acknowledged it would have to take a $5 billion third quarter 2007 charge for mortgage and credit problems. Then, on October 24, 2007, before the market opened, Merrill issued a press release which announced the third quarter charge would be $8 billion instead of $5 billion. On this news, Merrill's stock dropped from $67.12 per share to as low as $61.40 per share, closing at $63.22 per share on volume of 52 million shares. Subsequently, on October 25, 2007, S&P reduced Merrill's credit rating to negative after the brokerage reported the biggest quarterly loss in its 93-year history, causing Merrill's stock to dramatically drop to $60.90 per share.
Name (Stock Symbol)
Merrill Lynch & Co. Inc.
Merrill Lynch & Co. Inc., a subsidiary of Bank of America Corporation, provides a range of financial services, including asset management, investment banking, and investment advisory services.
The information provided on ClassAdvocate.com is general in nature,
does not apply to any particular factual situation, and is not and
should not be taken as legal or other professional advice. We make no
commitment or warranty that the factual, legal or any other information
on ClassAdvocate.com, or on any linked website, is accurate, complete,
error-free, or current. As such, you should not rely on such information,
and should seek professional advice if and as you determine appropriate.
ClassAdvocate.com is not a lawyer referral service, and no attorney-client
or confidential relationship is or should be formed by use of the site.
The investigations listed on ClassAdvocate.com are attorney advertisements
and do not in any way constitute a referral or endorsement by ClassAdvocate.com
or any approved or authorized lawyer referral service.