Merrill Lynch hit with suit over Excite@Home research
Shortly after agreeing to a US$100 million settlement with the New York State Attorney General over charges that it issued misleading research, Merrill Lynch & Co. Inc. was hit with a class-action lawsuit for allegedly maintaining positive ratings on stock of felled Internet service provider (ISP) Excite@Home Inc. when internal assessments of the company were far grimmer.
The class-action suit against Merrill, and its once vaunted Internet analyst Henry Blodget, was filed May 1 in the U.S. District Court for the Southern District of New York, and publically announced Friday by Cohen, Milstein, Hausfeld & Toll PLLC, the Washington, D.C.-based law firm handling the case.
The suit charges Merrill with releasing positive research reports on the now-bankrupt ISP when private communications reveal that company analysts had contrary views of the stock. Blodget was a particularly high-profile Internet analyst at the firm, who earned his fame in the dot-com heyday by predicting that stock of Amazon.com Inc. would soar to $400 a share.
The class-action suit comes on the heels of the brokerage's settlement with the New York State Attorney General, which conducted a 10-month probe of the commingling of Merrill's research and investment banking units. The settlement is seen as paving the way for a series of reforms both within Merrill and the brokerage industry at large.
Shareholders who purchased Excite@Home stock from August 18, 1999 through Sept. 28, 2001 have until June 21 to join as a lead plaintiff in the suit. No one from Merrill Lynch was immediately available to comment on the case.
ITworld.com
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