Couple Wins Damages Over Merrill Reports

A couple won a $1-million award against Merrill Lynch & Co. after claiming the investment firm hid conflicts of interest and issued fraudulent analyst reports.

An arbitration panel of the NASD, formerly the National Assn. of Securities Dealers, recently found that Merrill Lynch was “guilty of intentional misconduct” and knew it was using a rating system that overvalued many companies. The panel also found that Merrill Lynch managers, “knowingly condoned, ratified and consented to the conduct of its employees.”

The $1-million award includes $300,000 in punitive damages for Gary and Lisa Friedman of Boca Raton, Fla.

Merrill Lynch said in a statement that the facts did not support the NASD panel’s decision.

“The claimants’ losses, many of which came in blue-chip stocks, were caused by the same thing that caused millions of other investors to lose money between 2000 and 2002: The market plunged. That cannot reasonably be blamed on Merrill Lynch’s research,” it said.

The Friedmans said Merrill Lynch used its analysts and securities reports to bolster its investment banking business.

“Individual investors across the country lost billions of dollars because Merrill Lynch and other firms used analysts to pad their own pockets and benefit their investment banking clients instead of their retail clients,” their lawyer, Robert W. Pearce, said in a statement.

Merrill Lynch shares fell 75 cents to $58.58 on the New York Stock Exchange.