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Dismissal of lawsuit against Merrill Lynch upheld Tuesday, May 6, 2008 Arkansas News Bureau LITTLE ROCK - Merrill Lynch & Co. cannot be held liable by the 40 people who lost millions of dollars through investments made by the late Little Rock financier M. David Howell, a federal appeals panel ruled Monday. The 8th U.S. Circuit Court of Appeals in St. Louis upheld a Little Rock federal district court ruling in a case involving Howell, found dead in a California hotel room in 2002 about the time investigators in Arkansas were discovering a fraudulent investment scheme. His death was ruled accidental, but Monday's federal appeals court ruling referred to it as a suicide. In a nine-page decision, the court said there was no reason to believe Merrill Lynch helped Howell defraud the investors who filed the lawsuit against the company. The court said Howell borrowed money from investors and deposited it in an institutional account at Merrill Lynch. The investors alleged in their lawsuit that Merrill Lynch helped Howell in defrauding them and was in violation of the Arkansas Securities Act and common law fraud. "Because the complaint is devoid of any allegations which might establish Merrill Lynch materially aided Howell's sale of the promissory notes to the investors, the district court correctly concluded the investors failed to state a claim against the broker-dealer for a violation of the Arkansas Securities Act," the federal appeals court said. The complaint also "does not include factual allegation" supporting the fraud claim, the appeals court said. |
