Bank of America Corp.’s Merrill Lynch unit was sued by a Portuguese investment firm over a share sale that’s being probed by Italian regulators for potential market abuse.
Amorim Partners Ltd. claims Merrill Lynch International didn’t reveal the true nature of a “highly unusual” deal in which the Portuguese company agreed to buy shares in Saipem SpA (SPM) that were being sold on behalf of BlackRock Inc., according to Amorim’s documents from a London court hearing today.
Amorim agreed to buy 150,000 Saipem shares on Jan. 28, 2013, two days before the oil and gas company plunged 34 percent to 20.01 euros after cutting its profit forecast. Amorim said a full trial is needed to find out how much Merrill employees knew about the profit warning, responding to a lawsuit filed against it by the bank.
After finding out about the profit warning, an Amorim employee, Nathaniel Glas, told the bank he didn’t want to settle the trade, according to the firm’s court documents. “Someone at Merrill screwed up because I am not going to believe that they weren’t aware what was going on,” he said in a phone transcript cited in the papers.
Merrill Lynch asked the judge to rule in its favor without a trial because it says Amorim’s defense and counterclaim has no real chance of success.
Italy’s securities regulator Consob is investigating the sale of almost 10 million Saipem shares before the Milan-based company announced its earnings would be less than half the amount expected. BlackRock Inc. (BLK) said on Jan. 11 that one of its fund managers, Nigel Bolton, is facing a civil suit by Consob alleging he used non-public information to escape losses. BlackRock denies any wrongdoing.
Daniel Toledano, a lawyer for Merrill Lynch, told Judge Nicholas Hamblen that Amorim’s case contained “pure speculation.” A decision is expected later this week, Hamblen said.
BlackRock’s London spokesman Jonathan Mullen didn’t immediately respond to e-mails seeking comment. John McIvor, a spokesman for Bank of America spokesmen in London, declined to comment. Amorim’s Benjamin Guez and Glas both declined to comment on the case.
Amorim said in its court documents that Merrill Lynch was the only firm appointed to dispose of the BlackRock shares. The bank must provide evidence about “what was known by it or its officers or agents concerning, for example, the Saipem profit warning and/or market abuse.”
Merrill hasn’t explained why it was allocated more shares than it expected, Amorim said.
The case is: Merrill Lynch International v. Amorim Partners Limited, High Court of Justice, Queen’s Bench Division, Commercial Court, 13-251
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