Bubble Investors Can Still Try Arbitration,Other Courts
While Wall Street draws a sigh of relief that investor litigation has been dismissed against Merrill Lynch & Co. (MER), people who lost money during the dot-com years still have avenues to seek damages from Merrill and other firms.
Arbitration and state court are two of the forums for recouping losses, legal experts say.
In arbitration, individual customers of Wall Street brokerages attempt to recover money though proceedings at the New York Stock Exchange or National Association of Securities Dealers. The procedure takes about 12 to 15 months - faster than the 2 to 5 years it takes for most lawsuits to wind their way through the courts - and can often be cheaper for investors, arbitration lawyers say.
"That really is and always has been the investors' best avenue of recovering money," says Andy Stoltmann , a Chicago securities lawyer who has about 45 arbitration claims pending against Merrill and other firms.
He and other arbitration lawyers don't expect the dismissal of class-action claims against Merrill to have an impact on arbitration proceedings. On Tuesday, U.S. District Judge Milton Pollack in Manhattan called investors in Internet stocks "high-risk speculators" who couldn't show they were defrauded by Merrill's stock research.
"This decision does not have the far-reaching effects Merrill Lynch and other brokerage firms would have you believe," says Phil Aidikoff, a securities lawyer with Aidikoff & Uhl in Beverly Hills, Calif.
Merrill declined to comment on the impact of Judge Pollack's decision on arbitration or other claims still pending against the firm.
Judge Pollack dismissed suits brought against Merrill by stockholders of 24/7 Real Media Inc. and Interliant Inc. Earlier Wednesday, he also threw out a related case brought by shareholders of the Merrill Lynch Global Technology Fund.
The judge noted that the 24/7 and Interliant plaintiffs weren't Merrill customers and didn't claim they made their decisions based on reading Merrill's research reports.
Aidikoff says he currently represents investors in arbitration who are accusing Merrill and other firms of issuing overly bullish stock ratings to generate investment banking business. His clients, unlike the 24/7 and Interliant plaintiffs, were customers of the firms they are suing.
"That's the missing ingredient," he says.
Clearly, though, Merrill and other firms face a far greater threat from class-action litigation, in which plaintiffs hope to win potentially multibillion-dollar settlements on behalf of other investors. (By contrast, in 2002, a total of $139 million was paid out in arbitration, according to NASD statistics.)
It's unclear how much of an impact Judge Pollack's ruling will have on federal judges who are currently mulling similar class-action claims against other Wall Street firms. "It's one judge's view of the situation," says Fred Isquith, an attorney with Wolf Haldenstein Adler Freeman & Herz LLP, a firm that has pursued litigation against Morgan Stanley (MWD) and its analyst Mary Meeker.
Other federal judges will certainly consider Pollack's decision but are "not bound by it and may even disagree with it," he said.
Plaintiffs' attorneys, who make their living suing the likes of Merrill and other Wall Street firms, are considering other ways they might successfully pursue investor claims, says Jeffrey Haas, a securities law professor at New York Law School.
For instance, some plaintiffs' lawyer may pursue investor claims in New York state court under a consumer fraud statute, Haas says.
Investors in the Merrill case were rebuffed by Judge Pollack because they couldn't prove that the firm or its analysts intended to defraud them. The state statute, unlike tougher federal securities laws, doesn't require that plaintiffs prove intent, he says.
"Plaintiffs' attorneys are looking at potential billion-dollar settlements, and they're not going to go away because one judge said so," Haas says. "This is their chance to swing at the fence."
"It is something that the Merrills of the world need to be thinking about."
投资者起诉美林未果，欲靠仲裁索赔
法院驳回了投资者对美林公司(Merrill Lynch & Co.)提起的诉讼，令华尔街长长舒了一口气，然而，这些在网络泡沫时期损失惨重的投资者仍有可能通过其他渠道争取从美林和其他投资公司获得赔偿。
法律专家称，仲裁机构和各州法院就是投资者寻求补偿的两条途径。
在寻求仲裁方面，华尔街各经纪公司的个人客户正试图通过纽约证券交易所(New York Stock Exchange)或全国证券交易商协会(National Association of Securities Dealers)的仲裁程序获得赔偿。仲裁律师称，这类程序大概需要12至15个月的时间，比大多数法律诉讼所需的2至5年时间要快得多，并且投资者需支付的仲裁费用通常也较低。
芝加哥证券事务律师Andy Stoltmann称，仲裁的确是并且一直是投资者获取赔偿的最佳途径，他目前受理了45宗针对美林和其他公司的仲裁申请。
他和其他仲裁律师认为，虽然对美林的集体诉讼被驳回，但预计不会对仲裁程序产生影响。周二，曼哈顿的美国地方法庭法官Milton Pollack称网络股的投资者是高风险的投机者，并称他们不能提供证据表明他们受到了美林股票研究报告的误导。
对于法官Pollack的裁决对仲裁案件及其他等待审理的索赔申请的影响，美林拒绝作出评论。
Pollack驳回了由24/7 Real Media Inc.和Interliant Inc的股东提出的针对美林的诉讼请求。周三早些时候，他还驳回了美林全球科技股基金的股东提出的相关诉讼请求。
Wolf Haldenstein Adler Freeman & Herz LLP的律师Fred Isquith称，其他法官肯定会参考Pollack的裁定，但他们的裁定不会因此受到限定，甚至还有可能作出截然不同的裁决。
New York Law School的证券法教授Jeffrey Haas称，投资者的律师们正在考虑其他能成功索赔的途径。
Haas说，比如一些原告律师可能会以欺骗消费者的罪名向纽约州法院提起诉讼
