Company News: Former bank shareholders sue brokerage
Former shareholders of First Republic Bank sued Merrill Lynch & Co. on Friday, alleging the company hid billions of dollars in subprime mortgage-related losses while the two companies’ combination was pending.
The suit, filed in New York, seeks class-action status, unspecified damages for shareholder losses and a jury trial. Top Merrill executives, including former CEO Stan O’Neal, were also named as plaintiffs.
The Wall Street bank agreed in January to buy San Francisco-based First Republic for $1.8 billion in cash and stock.
In October, a month after the deal closed, Merrill reported that it was taking a writedown of about $8 billion in the third quarter because of the declining value of mortgage-backed debt. The writedown wiped out the bank’s earnings for 2006.
Merrill officials said errors in risk management contributed to the staggering loss, but none of that information was disclosed in the registration or proxy statements on the merger, according to the lawsuit.
As a result, First Republic shareholders were relying on “materially false and misleading” statements before approving the sale to Merrill.
Merrill’s O’Neal was ousted in November in the wake of the mortgage-lending crisis that has led to an estimated total of $105 billion in losses this year alone for global banks.
Wal-Mart Stores Inc. has closed an online movie download service it launched less than a year ago.
The retreat for Wal-Mart, which accounts for about 40 percent of all DVD sales, follows the company’s 2005 decision to abandoned efforts to build an online DVD rental service. The world’s largest retailer instead turned its rental service over to Netflix Inc.
Wal-Mart still operates a music download service and continues to sell CDs and DVDs at retail stores and over the Internet.
A message on Wal-Mart’s video download Web site said the store closed Dec. 21. The Web site said customers who already have bought movies could continue to watch them.
In a statement, Wal-Mart spokeswoman Amy Collella said the company closed the store after Hewlett-Packard Co., which provided the software running the site, “made a business decision to discontinue its video download-only merchant store service.”
Wal-Mart did not say whether it would attempt to start the service again using a different company’s software.
Officials with HP did not immediately return a request for comment Friday morning.
The Miami Herald is outsourcing copy editing of a weekly community news section and some advertising production work to India, a newspaper editor said Friday.
Starting in January, copy editing and design in a weekly section of Broward County community news and other special advertising sections will be outsourced to Mindworks, based in New Delhi.
The project remains in the testing phase, so it was unclear if or how jobs in South Florida will be affected, Executive Editor Anders Gyllenhaal said.
Mindworks will also monitor reader comments posted to online stories, he said.