The U.S. District Court for the Southern District has dismissed a securities fraud lawsuit filed by investor Nicholas Vale against ex-Merrill Lynch Internet Group head Henry Blodget on the grounds that Vale failed to factually show how the defendant’s fraud caused his investment losses.
In his lawsuit, Vale accused Blodget of issuing bogus positive reports about Internet Capital Group Inc. and B2B Internet HOLDRs, an exchange traded fund. He says that he depended on reports by Blodget and Merrill Lynch when he bought almost 3,000 ICGE stock shares for about $300,000 in 1999 and he would not have bought the shares if not for Blodget’s reputation as a research analyst.
In 2002, the New York State Attorney General’s Office accused Merrill Lynch, Pierce, Fenner & Smith Inc., Merrill Lynch & Co. Inc., and Blodget of regularly issuing false or misleading recommendations about Internet-based stocks to try and increase the firm’s underwriting business. Merrill Lynch settled the allegations with a $100 million fine. Vale, who says that he suffered major losses after selling the shares in 2000, is one of a large number of investors that have filed lawsuits accusing Merrill Lynch and Blodget of securities fraud.
The defendants of Vale’s lawsuit, however, argued that the case should be dismissed because Vale neglected to plead fraud with requisite particularity or to plead loss causation. The District Court granted their motion, citing that Vale neglected to plead that the alleged false statements that the defendants made caused the his financial losses.
The court’s findings are similar to its “loss causation” ruling in another lawsuit against Blodget and Merrill Lynch, this one filed by investor Ronald Ventura regarding investments he made in Internet holding company CMGI.
Please call the stockbroker fraud law firm of Shepherd Smith Edwards & Kantas, LLP to discuss your investment fraud case.
Related Web Resources:
SEC Sues Merrill Lynch & Henry M. Blodget for Research Analyst Conflicts of Interest Firm and and Blodget to Settle with SEC, NASD, and NYSE, SEC.gov, April 28, 2003
The Trial Of Henry Blodget, Forbes.com, January 6, 2003