Merrill Lynch and Co. has agreed to pay $164 million to settle 23 class-action lawsuits related to polluted research coverage of Internet companies by former analyst Henry Blodget.
The plaintiffs in the case said Merrill and Blodget hyped up research to recruit investment banking business from the companies included in the research. The settlements are subject to further agreements, as well as court approval, the brokerage giant said in a filing with the US Securities and Exchange Commission.
Plaintiffs will now drop appeals in 11 cases in which motions to dismiss were previously granted, Merrill said. Another 12 had not yet been ruled on. It said 16 others were previously dismissed or abandoned.
“Even though we prevailed in virtually every research class action that’s been adjudicated, we are settling these cases because we want to avoid the distraction and expense of further litigation,” said Merrill spokesman Mark Herr. Only two class actions related to Merrill’s research coverage of Internet companies will remain pending, the brokerage said. Herr said Merrill expects to win these suits, including one that is now before the US Supreme Court.
Merrill said it would take a litigation-related blow of $170 million, or $102 million after-tax, in the fourth quarter for the settlements. This charge will come to $0.10 per share.