In Dicta

Tuesday, July 19, 2005

$115 million victory for Merrill Lynch

"Merrill Lynch & Co. Inc. will be paid more than $115 million after winning a breach of contract action against an energy company that refused to pay the full purchase price for a Merrill Lynch unit because of alleged misrepresentations by the financial giant.

Southern District of New York Judge Harold Baer Jr. on Monday ordered Allegheny Energy Inc. to pay that amount plus interest after rejecting Allegheny's claims that it was wrongly lured into purchasing Merrill Lynch's energy-commodities trading business, Global Energy Markets (GEM), four years ago.


"It is clear that the only injury Allegheny has proven with reasonable certainty, connected to the actions of Merrill Lynch, is a loss of face," which is "not compensable," he said.

Addressing specifically Allegheny's claim that it was the victim of fraudulent inducement, Baer said Allegheny "is undoubtedly a sophisticated party that was represented at every step by competent, experienced and expensive advisors."

And given that Merrill Lynch accorded Allegheny four months to exercise due diligence by opening its books and records, he said, "Allegheny cannot now claim to have reasonably relied on non-disclosures as to information that was available had it pursued its due diligence with a little more pizzazz."

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