Justices Back Merrill Lynch Bid to Bar Secret Testimony’s Release

The California Supreme Court on Wednesday granted a petition by Merrill Lynch & Co. to block the release of secret grand jury testimony about the giant brokerage’s role in the Orange County bankruptcy.

The high court sent the matter back to the 4th District Court of Appeal in Santa Ana to hear Merrill Lynch’s appeal that the transcripts should not be made public.

The firm had obtained an emergency stay from the high court in August after Orange County Superior Court Judge David O. Carter ordered the testimony released.

In its ruling, the high court said Carter’s order “is stayed pending final disposition of the appeal,” and it ordered the appellate court to hear Merrill’s arguments.

“I’m disappointed that the release of these materials will be further delayed, but I’m hopeful the Court of Appeal will come to the same decision as Judge Carter--that eventually these materials will see the light of day,” said Kelli L. Sager, of the Los Angeles law firm of Davis, Wright & Tremaine, who represents media companies seeking the transcripts.

Merrill Lynch spokesman Timothy Gilles said, “We continue to believe that California law protects the privacy of innocent witnesses when no indictment has been issued.”

Merrill Lynch agreed in June to pay $30 million to halt the Orange County district attorney’s 30-month criminal investigation.

At issue is more than 9,000 pages of testimony from 42 witnesses, including 29 from Merrill Lynch, who testified about the firm’s involvement with the investments that led to $1.64 billion in securities trading losses and the largest municipal bankruptcy in history.