Thursday, November 7, 2013

Lentell v. Merrill Lynch & Co., Inc. case brief

Lentell v. Merrill Lynch & Co., Inc. case brief summary
396 F.3d 161 (2005)

Plaintiffs for a putative class of purchasers of the publicly traded stock of two internet companies, appealed from the dismissal by the United States District Court for the Southern District of New York of their securities-fraud actions against defendant, a stock brokerage firm and its top analyst.

Plaintiffs alleged that the firm, through its top analyst and other research analysts, issued false and misleading reports recommending that investors purchase shares of the two internet companies, even though the analysts did not then believe that those companies were a good investment. It was further alleged that analysts were touted to investors as independent assessors of business prospects, but that they issued the falsely optimistic recommendations to cultivate the firm's investment-banking clients.

The district court concluded that the suits were time-barred and in any event that plaintiffs failed to plead loss causation and fraud with the particularity required by Fed. R. Civ. P. 9(b) and the Private Securities Litigation Reform Act of 1995, 15 U.S.C.S. § 78u-4, and to overcome the "bespeaks caution" doctrine.

However, the court of appeals determined that the underlying complaints were timely filed, but affirmed the dismissal on the alternate ground that the complaints simply failed to plead that the alleged misrepresentations and omissions caused the claimed losses.

The district court's dismissal of the plaintiffs' securities fraud claims was affirmed.

Suggested Study Aids For Securities Regulation Law
Securities Regulation in a Nutshell, 10th (Nutshell Series)
Securities Regulation: Examples & Explanations, 5th Edition
Securities Regulations: The Essentials

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