Merrill class action settled for $40.3M

A federal judge approved a $40.3 million class action settlement between mutual fund customers and Merrill Lynch & Co. over alleged conflicts of interest between its brokerage and underwriting businesses, according to the Associated Press.
The decision, which was issued on Jan. 31 by U.S. District Judge John F. Keenan in New York gave final approval to the settlement, and certified the class and granted attorney’s fees and expenses of about $9.37 million.
The agreement had received preliminary approval in September.
Investors in Merrill’s Internet Strategies, Global Technology and Focus Twenty funds had alleged that the New York-based financial services giant had failed to disclose conflicts of interest between its brokerage and underwriting operations, specifically that the funds invested in securities of companies with whom Merrill Lynch had sought investment banking business, according to the report.
The investors also claimed that Merrill issued falsely optimistic research reports on securities held in the funds and invested in certain companies in hopes of gaining their investment banking business regardless of whether they were good investments.