In Focus

t's good news that Merrill Lynch is paying a $100 million penalty to the New York Attorney General and various state regulators. After all, Merrill's stock price rose on the news.

Seriously, though, I am delighted that state securities regulators now have additional funds to battle all of the other brokerage firms - Salomon Smith Barney and Morgan Stanley Dean Witter to name a few - which similarly might have deceived the investing public. Regulators may have to work harder as against Salomon, for example, because that firm has claimed that it did not maintain email messages as securities regulations required. Merrill followed those regulations, and look what happened.

But where, in the A.G.'s settlement with Merrill, is the restitution fund for aggrieved investors? The settlement has none of that, leaving investors to recoup their losses from what undoubtedly will be a "feeding frenzy" of typically "pennies on the dollar" class action lawsuits.

Investors seeking to recover more than pennies on the dollar will have to opt out of those class actions and file individual securities arbitration claims at either the NASD or the NYSE.

The stocks at issue in the A.G.'s investigation were:

1. Amazon (AMZN);
2. America On-Line (AOL);
3. Yahoo (YHCO);
4. Ebay (EBAY);
5. Double Click (DCLK);
6. Lycos (LCOS);
7. Homestore (HOMS);
8. Priceline (PCLN);
9. CMGI (CMGI);
10. Excite (ATHM);
11. Etoys (ETYS);
12. Barnes and Noble (BNBN);
13. My Points (MYFI);
14. I Village (IVIL);
15. 24/7 Media (TMSF)
16. Quokka Sports (QKKA);
17. Pets.com (IPET);
18. Infospace (INSP);
19. Exodus (EXDS);
20. Inktomi (INKT);
21. Real Networks (RNKW);
22. Internet Capital Group (ICGE);
23. Aribs (ARBA);
24. Vertical Net (VERT).
25. Aether System (AETH);
26. Excite (ATHM);
27. Goto.com (GOTO);
28. Lifeminders (LFMN);
29. Media (TFSM)

Investors must take care to protect their rights.

— James J. Eccleston
FinancialCounsel.com