October 2009

Bressler Obtains Dismissal of Four Consolidated Securities Actions

On October 23, 2009, Bressler, Amery & Ross, PC successfully obtained dismissal of four consolidated actions filed against Merrill Lynch, Pierce, Fenner & Smith, Inc. ("Merrill Lynch") in Morris County Superior Court.  In Leonard Frederick, et al. v. Maxwell Baldwin Smith, et al., plaintiffs alleged that Maxwell Smith induced them to invest $8,000,000 over a 16 year period into a limited partnership that turned out to be a non-existent investment.   Mr. Smith was not an associated person, registered representative of, or otherwise employed by Merrill Lynch, and the plaintiffs were not customers of Merrill Lynch.  Mr. Smith was a registered representative for several other brokerage firms during this 16 year period where the plaintiffs were his customers.  Plaintiffs allege that Mr. Smith instructed them to make their checks for investment in the limited partnership payable to Merrill Lynch. Mr. Smith deposited these checks in his personal account with Merrill Lynch and thereafter converted those funds.  Plaintiffs sought to hold Merrill Lynch liable for the amounts they invested in the limited partnership, alleging that Merrill Lynch failed to adequately supervise and monitor Mr. Smith’s account.  In obtaining dismissal of plaintiffs’ complaints, Merrill Lynch successfully argued that because the plaintiffs were not customers of Merrill Lynch, it did not owe them any duty to supervise and monitor Mr. Smith’s account and that as a result the plaintiffs could not state a claim against Merrill Lynch for negligent supervision and monitoring of that account.

If you would like to find out further information about this matter, please contact David J. Libowsky.