A class action lawsuit was filed in federal court yesterday against Merrill Lynch, hours after we reported that Merrill had been threatened with suits by brokerage customers whose assets were frozen in auction rate securities. Merrill is the latest entrant in a club that includes Morgan Stanley, Deutsche Bank and UBS, all of whom have been separately sued over alleged deceptive marketing of auction-rate securities.
Merrill also faces a separate arbitration claim from ASTAR Air Cargo, which seeks compensatory damages of $9.125 million and punitive damages of at least $27.375 million. ASTAR, an air carrier based in Wilmington,Ohio, filed the claim with the Financial Industry Regulatory Authority to gain access to ASTAR’s funds that currently are frozen in illiquid auction rate securities in the company’s Merrill Lynch account.
According to ASTAR, the air carrier instructed Merrill Lynch to place its cash reserves in products that would provide complete safety of principal and complete liquidity. In response, Merrill Lynch reportedly recommended the company purchase various ARS.
Update: Here’s a copy of the complaint against Merrill.
Merrill, Morgan Stanley sued over auction rates [Reuters]
ASTAR alleges Merrill Lynch fraud [Willmington New Journal]
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What is the deal with these companies? Are people too good to put their money into a money market fund nowadays?
Dear DB editors,
Since when law suit against ML is news? That’s as much news as sunrise everyday. With the kind of crooks and bigots running this firm what esle to expect? May be greed and corruption have to go hand in hand. YOu can not have w/o another!!
Can we please keep the TOEFL crowd out of here?
This is a huge surprise, HUGE i tell ya!
Merrill Lynch is being sued?!!!!
That’s a shocker! How come such decent corporation that has never been involved in fraud (never mind Enron, internet bubble investor rip offs, insider trading, sexual harrasment…)
can be accused of such thing?
Tese folks are pinnacle of respect for the law and trust of their clients and respect for their employees!
Check your resources again. It must be a mistake. NOT Merrill Lycnch. No chance..
Yes, they are for being active participants in the biggest $330,000,000,000 money heist of the 21st Century
http://ARSclassAction.com
In a somewhat related note, when are the Norwegian villagers going to sue Citigroup?
lalala
No wonder Merrill was having a giant bonfire in the courtyard of its clearing division during winter holidays…
Sorry to rain on everyone’s drama parade here but the lawyers have, as usual, grossly exaggerated this. Most brokers are not paid a penny for sales of ARP’s – they sold these because they wanted to provide the public with the best, SAFE short term yield available. No good deed goes unpunished! If you want to lay blame – blame the Fed for aggressively driving down short rates in the face of widespread credit fears and liquidity shortages. That is what caused this security to abandon its 24 year consistent reliability. No on hid anything, no one deceived anyone. Just unprecedented events creating other unprecedented events.
No one deceived anybody!?
I don’t think so:
http://arsclassaction.com/SEC.html
The only person who was straight from the get go was Bill Gross who called us “plankton” back in 2003
http://arsclassaction.com/billgross.html