US - Merrill Lynch has rubbished a claim by law firm Cohen, Milstein, Hausfeld & Toll which said it is investigating whether the fiduciaries of Merrill Lynch's 401(k) Savings and Investment Plan have violated the Employee Retirement Income Security Act of 1974 (ERISA).
The law firm said Merrill Lynch recently announced in a filing with the Securities and Exchange Commission (SEC) that it had taken a US$7.9bn third quarter “write-down” caused in large part by problems with mortgage-related investments.
A spokesperson for Merrill Lynch said: "In recent days, outside law firms have commenced 'investigations' into the Merrill Lynch 401(k), ESOP and Retirement Accumulation Plans.
“These investigations are not sanctioned by any governmental authority and we don't believe that there is any merit to these 'investigations'. You can infer that the purpose of these notices are to drum up business for these firms. "
Marc Machiz, head of the employee benefits practice for Cohen, Milstein, Hausfeld & Toll, said its investigation focused on senior executives of Merrill Lynch.
He said according to the company filings with the SEC, the executives also served on the executive committee of the 401(k) plan.
Machiz said it would look at whether the executives breached duties of loyalty and prudence by authorising the investment of plan assets in Merrill Lynch stock, when according to Machiz, the stock was no longer a suitable investment for the plan because of the company’s problems with mortgage-related securities.
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