Merrill Lynch (MER) Shareholder Derivative Lawsuit

In conjunction with our partner lawyers, we are currently investigating claims on behalf of current shareholders of Merrill Lynch to determine whether a shareholder derivative lawsuit may be warranted. A shareholder derivative suit is a lawsuit instigated by a shareholder of a corporation, not on the shareholder’s own behalf, but on behalf of the corporation. The shareholder brings an action in the name of the corporation against the parties allegedly causing harm to the corporation. Often derivative suits are brought against officers or directors of a corporation for violations of fiduciary duties owed to the shareholders vis-a-vis the corporation. Any proceeds of a successful action are awarded to the corporation. Often, derivative suits can be a strong vehicle for corporate governance reform.

Our Experienced Derivative Lawyers and Attorneys Have Years of Experience Representing Shareholders in Numerous Derivative Lawsuit Cases.

In September 2007, Merrill Lynch announced a $2.24 billion third-quarter loss tied to the credit crisis — the biggest in Merrill’s 93-year history. The news of staggering Merrill Lynch loss resulted in the ouster of Merrill Lynch CEO Stan O’Neal. At the same time it announced the $2.24 billion loss, Merrill Lynch revealed in a regulatory filing that it was the subject of an SEC investigation. While Merrill Lynch did not provide details as to the nature of the SEC inquiry, news reports at the time said that the SEC probe included deals that Merrill Lynch struck with hedge funds to allegedly cloak its vulnerability to so-called subprime mortgage debt.

The enormous losses incurred by Merrill Lynch have already resulted in at least one shareholder filing a derivative lawsuit. Our shareholder derivative lawyers believe that many other Merrill Lynch shareholders have similar claims.

Following an announcement by Merrill Lynch that it would have to write-down $8.4 billion in connection with mortgage-related investments, a Merrill Lynch Shareholder filed a derivative suit on October 31, 2007. The derivative action, entitled Arthur v. O’Neal, et al., Case No. 07-CV-9696 (S.D.N.Y.), was brought on behalf of Merrill Lynch & Co. against various Merrill Lynch directors and officers, including its CEO Stan O’Neal.

The Merrill Lynch shareholder derivative lawsuit accuses O’Neal of implementing a strategy whereby Merrill Lynch became the world’s leading underwriter of collateralized debt obligations. The action then accuses Merrill Lynch’s officers and directors of “turning a blind eye” to this “imprudent strategy” and “completely abdicating” their duties as directors. The Merrill Lynch shareholder derivative lawsuit also accuses the officers and directors of issuing false and misleading public financial statements to conceal the exposures Merrill Lynch faced from this strategy.

Based on these allegations, the derivative plaintiff accuses the officers and directors of Merrill Lynch of breaching their fiduciary obligations of due care, loyalty and diligence in the management and administration of the affairs of the Company, as well as in the use and preservation of its property and assets. The plaintiff further accuses the defendants of abuse of control and gross mismanagement.

The Merrill Lynch shareholder derivative lawsuit followed the filing of a shareholder class action suit against the firm on October 30, 2007 . The action, entitled Life Enrichment Foundation v. Merrill Lynch & Co., et al., Case No. 07-CV-9633 (S.D.N.Y.), accuses Merrill Lynch of making false and misleading statements about its subprime mortgage investments. The action was filed amid intense scrutiny following the announced write-down, which has also resulted in the resignation of Merrill Lynch’s CEO, Stan O’Neal. The plaintiff contends that the write-down announced by Merrill Lynch reflects inaccuracies in the financial statements that were revealed when the write-down was announced.

If you are a Merrill Lynch shareholder and suffered a financial loss, you have valuable legal rights. Please contact us by filling out or online form or calling 1-800-LAW INFO (1-800-529-4636) for a free consultation with one of our experienced shareholder derivative lawsuit attorneys.