A federal judge gave final approval to a $75 million settlement between Merrill Lynch and employees who sued the New York-based brokerage house in 2007 to recover losses they sustained from holding Merrill company stock in their retirement plans.
Under terms of the deal, approved last week by Judge Jed S. Rakoff of the U.S. District Court for the Southern District of New York, Merrill Lynch & Co. Inc. has agreed to use the payout to reimburse employees in three retirement and savings plans who held Merrill stock between Sept. 30, 2006 and Dec. 31, 2008.
The consolidated employee claims, brought under the Employee Retirement Income Security Act of 1974, alleged that executives and board members who oversaw the retirement plans knew Merrill was in trouble from collateralized debt obligations and subprime losses, but failed to make adequate disclosures to participants in its retirement plans.
Merrill's retirement plans at one time held a total of $4.7 billion in company stock.
The settlement is a good deal for the plaintiffs, said Marc Machiz, a partner at Cohen Milstein Sellers & Toll PLLC in Philadelphia, a co-lead plaintiff’s counsel in the case.
“You need plenty of proof to win” an ERISA claim, he said. “The ability to win carries substantial risk, so we settled.”
Merrill spokesman Bill Halldin declined to comment.
The settlement does not involve any admission of wrongdoing by Merrill.