A judge tossed out lawsuits by investors who claim Merrill Lynch & Co was responsible for the money they lost on two companies whose stock prices plummeted after the Internet bubble burst.
US District Judge Milton Pollack said the two lawsuits were filed by investors who were no more than "high-risk speculators" who never would have sued had they made money during the dot-com crash rather than lost it.
US securities laws were not meant to "underwrite, subsidize and encourage their rash speculation in joining a freewheeling casino that lured thousands with the fantasy of Olympian riches," the judge wrote.
The suits claimed former star analyst Henry Blodget and others at Merrill Lynch misled investors by hyping stocks in their research reports to lure investment banking business.
"We're pleased by the judge's decision," Merrill Lynch spokesman Mark Herr said. "We are pleased that he accepted our arguments."
Lawyers representing the investors were not immediately available for comment.
Judge Pollack ruled on suits brought by investors in Interliant Inc and 24/7 Real Media Inc, whose stock prices fell dramatically, along with many other Internet stocks, beginning in 2000.
But the ruling could be more significant than just those two cases. Pollack is also considering 25 other similar suits against Merrill Lynch, each based on a different company or investment fund.
Pollack has indicated the rulings in the Interliant and 24/7 Real Media cases could influence the outcomes of other lawsuits in which investors blame analysts for their losses during the bubble. He put the 25 other suits on hold while he considered the 24/7 Real Media and Interliant suits.
His decision was issued Monday and made public Tuesday.
Interliant, based in Purchase, New York, provides Internet security services for businesses and has filed for bankruptcy protection. New York-based 24/7 Real Media is an Internet marking firm.
In a separate case, another federal judge threw out a class action suit that claimed research analysts for Goldman Sachs, Credit Suisse First Boston and Morgan Stanley Dean Witter issued biased reports.
But that ruling, by US District Judge Harold Baer in a case surrounding research reports on Covad Communications Corp in 1999 and 2000, rested more on legal technicalities than broad merits.