NEW YORK, May 21, 2002 (PRIMEZONE) -- The ground-breaking settlement reached between Attorney General Spitzer and Merrill Lynch (NYSE:MER) provides for a $100 million fine to be paid by Merrill. In addition, the settlement provides dramatic revamping of compensation arrangements for Merrill's analysts severing the compensation link between research and investment banking divisions that tainted investment advice, Spitzer said in a statement.
Spitzer made clear that he would not create a fund to compensate investors who claimed they lost millions of dollars due to Merrill's misconduct, leaving that avenue of redress to class action lawsuits and private arbitration cases.
Stanley Grossman, a New York attorney representing shareholders in class actions pending against Merrill Lynch applauded the settlement obtained by the Attorney General. According to Grossman, the Attorney General was extremely courageous in taking on a long-established Wall Street compensation practice that had greatly affected the ability of brokerage houses, such as Merrill, to give independent investment advice.
Grossman's firm is presently litigating against Merrill on behalf of shareholders of 24/7 Real Media (Nasdaq:TFSM), Excite@Home (OTCBB:ATHQE), Aether Sytems (Nasdaq:AETH), Internet Capital Group (Nasdaq:ICGE) and Goto. The Complaints allege that Merrill's research reports and ratings were neither independent nor objective, but instead were biased and improperly influenced by Merrill's lucrative investment banking business relationships with these important corporate clients. In order to maintain and enhance Merrill's investment banking relationships, Merrill issued positive ratings on the companies which were materially misleading as they were inconsistent with Merrill's own contemporaneous, private adverse assessments.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca