Oct, 2002 : Exodus Shareholders Sue Merrill Lynch, Blodget
📅 - Exodus Communications Inc. shareholders have launched a class-action lawsuit against Merrill Lynch & Co. Inc. and its former Internet analyst, Henry Blodget.
The lawsuit alleges Merrill Lynch and Blodget violated federal securities law by issuing analyst reports on Exodus "without any reasonable factual basis."
In December 1999, Exodus Communications stock rose 15 per cent to more than $165 a share after Blodget began covering the stock with near- and long-term "buy" ratings. By June 2001, the company's stock had tumbled and was trading at less than $2 a share.
The shareholder lawsuit seeks to recover damages for investors who bought Exodus common stock between Dec. 8, 1999, and June 19, 2001.
The law firm of Kaplan Fox & Kilsheimer LLP, which is representing shareholders, also alleges the defendants failed to disclose a conflict of interest in using Blodget's reputation and reports to obtain investment banking business. Additionally, the securities firm and its former employee are accused of not disclosing adverse information about Exodus Communications that allowed the stock to trade at inflated levels.
Exodus Communications declared bankruptcy in September 2001 and eventually sold the majority of its assets to Cable & Wireless for $560 million.
The lawsuit alleges Merrill Lynch and Blodget violated federal securities law by issuing analyst reports on Exodus "without any reasonable factual basis."
In December 1999, Exodus Communications stock rose 15 per cent to more than $165 a share after Blodget began covering the stock with near- and long-term "buy" ratings. By June 2001, the company's stock had tumbled and was trading at less than $2 a share.
The shareholder lawsuit seeks to recover damages for investors who bought Exodus common stock between Dec. 8, 1999, and June 19, 2001.
The law firm of Kaplan Fox & Kilsheimer LLP, which is representing shareholders, also alleges the defendants failed to disclose a conflict of interest in using Blodget's reputation and reports to obtain investment banking business. Additionally, the securities firm and its former employee are accused of not disclosing adverse information about Exodus Communications that allowed the stock to trade at inflated levels.
Exodus Communications declared bankruptcy in September 2001 and eventually sold the majority of its assets to Cable & Wireless for $560 million.
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URL source: http://www.thewhir.com/marketwatch/exo101802.cfm
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