On January 16, 2009, Ohio Attorney General Richard Cordray and investors agreed to approve a $475 million settlement for a class action suit filed against Merrill Lynch (In re Merrill Lynch & Co., Inc. Securities, Derivative and ERISA Litigation, No.07-CV-9633 (S.D.N.Y.)).
The Ohio State Teachers Retirement System (“OSTRS”), represented by the Ohio Attorney General, brought the suit in May 2008, alleging that Merrill Lynch had made misstatements relating to its exposure to collateralized debt obligations and assets backed by subprime mortgages. According to the OSTRS, Merrill Lynch’s failure to disclose material information relating to its exposure to subprime debt artificially inflated the market price of its stock, thereby injuring investors in Merrill Lynch. The suit covered investors who purchased Merrill Lynch stock between October 17, 2006 and December 31, 2008. (The press release by the Ohio Attorney General can be found here.)
Additionally, Merrill Lynch announced in its 8-K, filed on January 16, 2009, that it had entered into a $75 million proposed settlement with Merrill Lynch employees who had invested in Merrill Lynch between September 30, 2006 and December 31, 2008. (Merrill’s 8-K can be found here.) The allegations by Merrill Lynch employees were also based upon Merrill Lynch’s alleged misstatements and failures to disclose information relating to its exposure to subprime debt.