A group of investors in women's Internet media network iVillage has filed a class-action lawsuit against Merrill Lynch and analyst Henry Blodget, its former Internet guru, for securities fraud. The suit alleges that Blodget misled investors with biased reports during the Net's boom days. The move follows a $100 million settlement between the New York Attorney General's office and Merrill Lynch, which agreed to pay the settlement and to revamp its research department to resolve charges that it had duped investors by publicly promoting stocks it privately bad-mouthed.
Washington-based Finkelstein Thompson & Loughran filed the lawsuit on behalf of investors in iVillage who bought shares between Nov. 9, 1999 and May 7, 2001. The suit, filed in the United States District Court for the Southern District of New York, alleges that Merrill and Blodget failed to disclose "significant conflicts of interest between their investment banking and research departments," and issued positive stock recommendations that were false.