Merrill Lynch Settles Unilever Lawsuit

Merrill Lynch & Co. settled a high-profile lawsuit that claimed the Wall Street firm’s British investment unit mismanaged a large pension fund, potentially leading to a flurry of similar cases.

Merrill, which admitted no liability, settled a $185-million negligence suit filed by Unilever’s pension fund for an undisclosed amount that could be as much as $100 million, according to reports.

The Unilever Superannuation Fund sued Merrill-owned Mercury Asset Management, claiming that lax controls enabled a fund manager to stray from his stated strategy.

For example, Mercury invested more than half of the portfolio in general industrial companies, while the sector made up less than 17% of the index the portfolio was supposed to replicate.

Unilever said this type of mismanagement prevented it from benefiting from the big stock market rise from January 1997 through March 1998, when it eventually fired Merrill.

Merrill, which bought Mercury for $5.3 billion in 1997, is not expecting more legal action.