An investor lawsuit has been filed against Merrill Lynch & Co Inc, contending that the company issued false and misleading statements about its exposure to risky mortgage investments, the plaintiffs' lawyers said on Tuesday.
The lawsuit, which the lawyers said was filed in U.S. District Court for the Southern District of New York, seeks class-action status. It was brought by law firm Coughlin Stoia Geller Rudman & Robbins LLP on behalf of an institutional investor, Life Enrichment Foundation.
The complaint accused Merrill of issuing materially false and misleading statements about its financial exposure to collateralized debt obligations (CDOS) containing subprime mortgage securities.
The company's statements were materially false due to their failure to inform the market of the ticking time bomb in the company's CDO portfolio due to the deteriorating subprime mortgage market, the complaint said.
Also named as defendants are Stanley O'Neal, who was ousted as Merrill chairman and chief executive on Tuesday, firm Co-Presidents Ahmass Fakahany and Gregory Fleming and Chief Financial Officer Jeffrey Edwards.
The complaint was brought on behalf of purchasers of Merrill stock between February 26 and October 23.
A Merrill representative was not immediately available for comment.