A Florida-based law firm has initiated an investigation into the sales practices used to promote two aggressive
The announcement of the investigation comes one day after The Wall Street Journal reported that James McCall, the manager of both funds, resigned from Merrill (
"Numerous Merrill Lynch customers who have bought this fund have contacted us," said Lawrence Klayman, a partner at Klayman, Lazarus & Toskes, P.A., the firm initiating the investigation. "Were looking at how it was sold. It was pushed real hard. [Merrill] sold a lot of this to retirees and people it shouldnt have been sold to."
Right now, the law firm represents more than five of the funds shareholders. Very recently, the firm has been inundated with calls from shareholders and expects to sign on many more clients, said Klayman.
The firm was working on launching the investigation before the reports that McCall was resigning surfaced, said Klayman. Still, the nature of the resignation will become part of the investigation. "Mr. McCall managed these funds and he was down double the market," said Klayman. "He departed Merrill and Im sure were going to look at under what circumstances he left."
Neither McCall nor Merrill is commenting on the reason for the portfolio managers departure, according to the Journal. McCall had been recruited by former Merrill Lynch Investment Managers president Jeffrey Peek. Peek resigned in September after the firm selected Stanley ONeal, not him, to be president of the firm.
McCall was surrounded by controversy as soon as he decided to join Merrill. He was formerly with
In his suit, McCall made allegations that the firm never paid him money he was owed and that it engaged in nepotism, favoring CEO Harold Baxters daughter, another portfolio manager. The suit was settled out of court in August 1999 (