Merrill Lynch Found Guilty of Intentional Misconduct With Regard to Analysts' Stock Ratings

Merrill Lynch Found Guilty of Intentional Misconduct With Regard
to Analysts' Stock Ratings
- Merrill Lynch Ordered to Pay More Than $1 Million Including Punitive Damages
-



BOCA RATON, Fla., Feb. 28  /PRNewswire/ -- Merrill Lynch, Pierce, Fenner &
Smith, Inc. (Merrill Lynch) has been ordered by an arbitration panel of the
National Association of Securities Dealers, Inc. (NASD) to pay more than $1
million to Gary and Lisa Friedman, including punitive damages, on the
Friedmans' claim that Merrill Lynch hid conflicts of interest and issued
fraudulent analyst reports and ratings in order to boost the firm's investment
banking revenue.

According to the award, the arbitration panel found "clear and convincing
evidence" that Merrill Lynch was "guilty of intentional misconduct in that they
had actual knowledge that many of the companies for which they were issuing
and/or maintaining ratings of 1, 2 or 3 during the relevant period of time
were, in reality, overvalued by this rating system."  Further the panel found
that Merrill Lynch manager, "knowingly condoned, ratified and consented to the
conduct of its employees."

The Friedmans were represented by Boca Raton, Florida securities attorney
Robert W. Pearce who argued that all of Merrill Lynch's research analysts were
conflicted by the firm's flawed business model.

The Friedmans, who did not own any of the securities identified in New York
Attorney General Elliott Spitzer's investigation or the global settlement
reached with Wall Street firms in 2003 (see endnote for list of securities in
the Friedmans' portfolio), received a seven-figure award with Mr. Pearce's
assistance.

"The Merrill Lynch fraud was not limited to its Internet sector research
analysts," said Pearce.  "It was clear that Merrill Lynch used all of its
analysts, securities reports and ratings as marketing vehicles to bolster its
investment banking business."

This ruling also represents one of few cases in which punitive damages have
been awarded in any analyst case and is one of the rare instances in which a $1
million+ award has been issued.

"This is the largest punitive damage award we have seen in a research analyst
case and has significant findings of fact," said Rick Ryder, publisher of
Securities Arbitration Commentator, Maplewood, NJ, which tracks awards in the
securities industry.  "This case will provide encouragement to investors who
have filed similar claims to pursue them.  It also creates a path for others to
follow regarding how to prepare and present a compelling research analyst
case."

Pearce stipulated this was a pure Merrill Lynch research analyst conflict-
of-interest case and that there were no other issues involved.

"The fact that part of Merrill Lynch analysts' compensation was based upon the
performance of the investment banking division is a blatant conflict of
interest that was never disclosed to clients," said Pearce.  "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."

A complete copy of the NASD Award can be found at
http://www.secatty.com/FriedmanG-ArbAward.pdf .

About Robert W. Pearce

Robert Wayne Pearce of the Law Offices of Robert Wayne Pearce in Boca Raton, FL
has specialized in securities litigation and arbitration matters for 25 years. 
He represents investors, brokers and others in court, arbitration and
administrative proceedings before the SEC, CFTC, NASD, NYSE and other
government regulatory agencies.

For more information on Mr. Pearce, call [phone] or visit
http://www.secatty.com/ .

   Endnote:  Friedman Portfolio:
   Agilent Technologies (A)
   Agere Systems A (AGR.A)
   Agere Systems B (AGR.B)
   Alcatel (ALA)
   AOL Time Warner (TWX)
   America Online (AOL)
   Ariba (ARBA)
   Autonation (AN)
   Avaya (AV)
   AXA (AXA)
   Bellsouth (BLS)
   JP Morgan Chase (JPT)
   Ciena (CIEN)
   Cisco Systems (CSCO)
   Commerce One (CMRCO)
   Compaq Computer (HP)
   Corning Inc (GLW)
   Electronic Data Systems (EDS)
   Ericsson LM (ERICY)
   Genxyme Corp (GENZ)
   Glaxosmithkline (GSK)
   Inktomi (INKT)
   Lockheed Martin (LMT)
   Lucent (LU)
   Mastec (MTZ)
   Microsoft (MSFT)
   Monsanto (MON)
   Monsanto/Pharmacia (PHA)
   Motorola (MOT)
   National Beverage Corp (FIZ)
   NCR (NCR)
   Newbridge Networks (NBGC.PK)
   Nokia (NOK)
   Smithkline Beacham (GSK)
   Sovreign Bancorp (SOV)
   Sun Microsystems (SUNW)
   Sycamore Networks (SCMR)
   Texas Instruments (TXN)
   Walt Disney (DIS)


DATASOURCE: Law Offices of Robert Wayne Pearce



CONTACT:  Michael Biagiotti, [phone], for Law Offices of Robert

Wayne Pearce



Web site:  http://www.secatty.com/

http://www.secatty.com/FriedmanG-ArbAward.pdf 

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