New Jersey Superior Court Denies Motion to Dismiss in Its Entirety; Case Proceeds on Behalf of New Jersey’s Division of Investment
By decision dated April 23, 2010, the Superior Court of the State of New Jersey denied the motion of Bank of America and Merrill Lynch & Co. to dismiss the complaint filed by New Jersey’s Division of Investment in State v. Merrill Lynch & Co., L-3855-09, in its entirety, allowing the state to proceed with all of its claims.
State of New Jersey, Department of Treasury, Division of Investment v. Merrill Lynch & Co., Inc. and Bank of America Corp.
Wolf Popper represents the State of New Jersey Division of Investment (“NJ DOI”) on an individual $300 million claim against Merrill Lynch & Co., Inc. (“Merrill”) pending in Superior Court, Hudson County, New Jersey. The claims arises out of NJ DOI’s January 2008 investment in Merrill preferred shares, and NJ DOI’s conversion of those preferred shares into common shares in July 2008.
The lawsuit asserts claims of breach of contract and negligent misrepresentation with respect to Merrill’s financial condition. According to the complaint, Merrill distributed inaccurate and incomplete financial reports, under-stated financial risks to which it was exposed and violated generally accepted accounting principles. Largely on the basis of this misleading information, the NJ DOI agreed in January 2008 to purchase $300 million worth of preferred, “convertible” stock.
In July 2008, Merrill sought to reset the terms of the stock deal. According to the complaint, Merrill informed NJ DOI that all other members of an investment group that had bought the original “preferred” stock -- and who had then agreed to the July 2008 common stock conversion -- would receive the same investment terms. In fact, the lawsuit charges, at least one investor received a preferential deal that included a more favorable exchange rate and continued retention of preferred stock with a dividend.
The complaint was filed July 28, 2009.
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