{"id":5989,"date":"2016-05-23T00:00:00","date_gmt":"2016-05-23T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2016\/05\/investors_can_sue_bank_of_amer"},"modified":"2022-05-18T15:04:34","modified_gmt":"2022-05-18T20:04:34","slug":"investors-can-sue-bank-of-amer","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/investors-can-sue-bank-of-amer\/","title":{"rendered":"Investors Can Sue Bank of America\u2019s Merrill Lynch For Illegal Short Selling in State Court, Rules U.S. Supreme Court"},"content":{"rendered":"

The U.S. Supreme Court has issued a unanimous ruling allowing investors to sue Bank of America Corp\u2019s Merrill Lynch (BAC) <\/a>and other brokerage firms in New Jersey state court even though the lawsuit cites federal laws. The plaintiffs, who are Spectrum Group International Inc. investors, claim that they sustained investment losses because the brokers engaged in illegal short-selling. They are invoking NJ\u2019s RICO statute in their case. RICO is the Racketeer Influenced and Corrupt Organizations Act. It is a federal law that allows for victims of organized crime to seek civil damages. It also provides provisions for other extended penalties. Bank of America Merrill Lynch claims that this naked short selling case is meritless.<\/p>\n

The plaintiffs are accusing Merrill Lynch and other broker-dealers of playing a part in causing Spectrum\u2019s market capitalization to drop by $800M in 11 months. The investors said that the firms did this by helping naked short sellers who bet against the company, causing its share price to plunge.<\/p>\n

Naked Short Sales<\/strong>
\nA short sale involves the use of borrowed shares to bet that a security\u2019s price with drop. The short sale is naked if the trader doesn\u2019t borrow the shares required to make the transaction happen. Under Regulation SHO, naked short sales cannot be used to manipulate a security. Still, lawsuits over illegal naked short selling haven\u2019t done too well in federal court.<\/p>\n

Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The U.S. Supreme Court has issued a unanimous ruling allowing investors to sue Bank of America Corp\u2019s Merrill Lynch (BAC) and other brokerage firms in New Jersey state court even though the lawsuit cites federal laws. The plaintiffs, who are Spectrum Group International Inc. investors, claim that they sustained investment losses because the brokers engaged […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3751,3752,3800,3973],"tags":[],"class_list":["post-5989","post","type-post","status-publish","format-standard","hentry","category-bank-of-america","category-financial-firms","category-merrill-lynch","category-short-selling"],"yoast_head":"\nInvestors Can Sue Bank of America\u2019s Merrill Lynch For Illegal Short Selling in State Court, Rules U.S. Supreme Court — Investor Lawyers Blog — May 23, 2016<\/title>\n<meta name=\"description\" content=\"The U.S. Supreme Court has issued a unanimous ruling allowing investors to sue Bank of America Corp\u2019s Merrill Lynch (BAC) and other brokerage firms in New — May 23, 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