ATLANTA–LAWFUEL – US Legal Announcements – Chitwood Harley Harnes LLP announces that a class action lawsuit has been filed against Merrill Lynch & Co., Inc. (“Merrill” or the “Company”) (NYSE: MER) on behalf of purchasers of Merrill common stock between February 26, 2007 and October 23, 2007 (the “Class Period”). The case, filed in the United States District Court for the Southern District of New York, alleges that Merrill, and certain of its officers and directors, violated the Securities Exchange Act of 1934.
Specifically, the complaint alleges that, during the Class Period, defendants issued materially false and misleading statements regarding the Company’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 the Company 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) the Company was more exposed to CDOs containing subprime debt than it disclosed; and (ii) the Company’s Class Period statements were materially false due to their failure to inform the market of the huge risks undertaken by the Company with its 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. Despite writing off over $8 billion of subprime mortgages, structured bonds and loans in the third quarter, Wall Street is not convinced that Merrill has put its credit trading losses behind it and several analysts have forecasted further writedowns in the brokerage giant’s fourth quarter, with some estimates topping $4 billion. On November 2, 2007, it was reported that Merrill may have sought to cover up and delay the recording of losses arising from its CDO portfolio by engaging in undisclosed off-book transactions with hedge funds. Merrill issued a statement in response to these reports, but its stock dropped again dramatically in response to these reports even after Merrill responded.
Chitwood is investigating all available claims, including the possibility of extending the class period to reflect recent disclosures. No class has yet been certified in the above action. Until a class is certified, you are not represented by counsel unless you retain one. If you purchased the stock listed above during the class period, you have certain rights. To be a member of the class you need not take any action at this time, and you may retain counsel of your choice.
If you purchased the securities of Merrill between February 26, 2007 and October 23, 2007, you may move the court to appoint you as lead plaintiff, a representative party that acts on behalf of other class members. The court must determine whether the class member’s claim is typical of other members’ claims, and whether the class member will adequately represent the class, following the lead plaintiff deadline of December 31, 2007. If you have questions about the lawsuit or about how you might become more actively involved, please email James Wilson at JWilson@Chitwoodlaw.com or call 1-888-873-3999.