Homestore investors sue Merrill Lynch
December 20, 2002
Allege conflicts of interest, misleading research reports
Inman News Features
Homestore's disgruntled shareholders have found yet another deep-pocket to sue in their quest to recoup the losses they sustained on investments in the company's once high-priced stock. The target this time is Merrill Lynch & Co. along with Henry Blodget, the securities analyst who used to head the stock brokerage house's Internet research group.
The lawsuit was filed by Finkelstein, Thompson & Loughran as a proposed class-action on behalf of people who bought Homestore's common stock between Sept. 8, 1999, and Sept. 21, 2001. The Washington, D.C.-based law firm is "pursuing numerous actions involving (allegedly) misleading research reports published by Merrill Lynch and Credit Suisse First Boston that recommend various ‘new economy' and ‘dot-com' companies," according to a press release the law firm issued today.
The complaint alleges that Merrill Lynch's research reports about Homestore as an investment opportunity were materially false and misleading because they didn't disclose a number of alleged conflicts of interest involving analysts' compensation, favorable research ratings, investment banking business and the like.
Blodget earlier this year resigned from his position with Merrill Lynch. The high-profile and oft-quoted securities analyst was under fire for his lofty recommendations of stock in companies that later proved to be poor investments.
Homestore's shares were trading today at 93 cents.
Copyright: Inman News Service