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Merrill court case may spark flood of claims

Merrill Lynch faces the threat of further legal action this week following its decision to settle the Unilever case, with IFAs concerned that the case has damaged the reputation of all fund managers among retail investors.

The news comes as the Consumers&#39 Association warns fund managers that they must not neglect retail investors now that institutional investors have become more aggressive.

Senior policy adviser Mick McAteer says: “Our concern is what will happen now. It is bound to be tempting for the big insurance or fund management firms to make sure their resources are applied to their institutional clients rather than their retail clients.”

The high-profile eight-week court case came to an abrupt end on Friday as Merrill Lynch agreed to settle with Unilever out of court for a reputed £70m. Unilever had originally sought about £130m in compensation for the underperformance of its pension funds during the late 1990s which were managed by Mercury Asset Management. MAM was bought by Merrill in November 1997.

The case pitted Merrill&#39s star fund manager Carol Galley against Unilever chief inv-estment officer Wendy Mayall.

In settling out of court, Merrill has avoided setting a legal precedent but the successful outcome for Unilever may spark a series of similar cases.

Supermarket chain Sainsbury has already come forward as one firm which is considering suing Merrill for its poor pension fund performance.

IFAs have given a tentative welcome to the deal although some have voiced concerns that it in the longer term it could lead the way for retail investors to consider legal action against their financial advisers.

Michael Philips proprietor Michael Both says: “IFAs are going to be very very nervous and their clients are going to end up with a lot more deposit funds. For the retail client, it could be bad news.”

Chelsea Financial Services managing director Darius McDermott says: “I think this case further damages the whole fund management ind ustry – with a big company having effectively lost such a highprofile case. I don&#39t think it will have done Merrill Lynch&#39s reputation any good in the IFA market.”


Mandrake goes with Synaptic

National IFA Mandrake Associates has signed up with Synaptic Systems for the provision of its Product Research Professional software and its comparative quotation system.Synaptic corporate business development Brod Whiting says: “We are delighted that such a successful national IFA firm has chosen Synaptic as its preferred technology partner. We will be working closely together to […]

SEI rethinks Dublin arm as bond is put on hold

Scottish Equitable Intern-ational is considering its options for its Dublin-based offshoot after having to put its with-profits bond on ice. SEI opened offices in Dub-lin with the intention of offering the with-profits bond. But following the events of September 11, the launch was delayed, with the company claiming that the climate was now too unfavourable, […]

Verity&#39s view

Poor Merrill Lynch. Only very rarely does one feel sorry for a giant US investment bank. But looking at the public statements of this king of global finance after settling Unilever&#39s action for negligence, anyone who lacked sympathy would have to have a heart of ice. The brief joint statement that accompanied the $100m settlement […]

Baillie Gifford – High Yield Bond Fund

Monday, December 10, 2001.Type: Oeic.Aim: Income by investing in sub-investment grade fixed-interestsecurities.Minimum investment: Lump sum £1,000.Investment split: 100 per cent in sub-investment grade fixed-interestsecurities.Yield: 10 per cent.Isa link: No.Pep transfers: No.Charges: Initial 3.5 per cent, annual 1 per cent.Commission: Initial 3 per cent, renewal 0.5 per cent.Tel: 0800 9174752.

Trusts: Easier than you think?

Protection providers often extol the benefits of placing plans in trust. The advantages for clients are widely recognised and numerous – inheritance tax mitigation, avoiding probate delay, controlling claim proceeds, and so the long, familiar list continues. Yet, dismissed as unnecessary form-filling, or simply viewed as irrelevant in the context of a mortgage sale, less […]


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