Texas Court Revives Merrill Fraud Liability Claim

Law360, New York (July 12, 2011, 4:14 PM EDT) -- A Texas state appeals court on Tuesday revived a single claim in a lawsuit alleging that Merrill Lynch Pierce Fenner & Smith Inc. was liable for a former securities broker’s fraudulent sale of two direct-marketing businesses he operated.

The lower court correctly tossed the bulk of David Fernea’s multimillion-dollar suit, but erred in granting summary judgment on his claim that Merrill Lynch was liable as a control-person for broker Terry Bounds’ misdeeds, the appeals court said.

“[A]s a condition of his employment, Bounds agreed not to...
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