Court Dismisses Suit Alleging Fraud by Merrill Lynch in the Sale of RMBS

On October 8, Justice Charles E. Ramos of the New York Supreme Court for the County of New York, Commercial Division entered an order dismissing an amended complaint brought by Phoenix Light SF Limited, Silver Elms CDO PLC, Silver Elms CDO II Limited, and Kleros Preferred Funding V PLC against Merrill Lynch & Co., Inc. The plaintiffs alleged Merrill Lynch committed fraud in its sale of more than $210 million of RMBS. The court held that the fraud allegations were not specific enough to meet New York’s heightened pleading standard for fraud claims and some of the alleged misstatements were not actionable because they postdated the sale. Justice Ramos dismissed the complaint with leave to amend. Decision.