ATLANTA (CN) - A Guatemalan military service agency cannot bring a Florida state-law claim against Merrill Lynch for failing to stop a fraudulent investment scheme, the 11th Circuit ruled.
The Pension Fund of America defrauded Latin American investors, including the Instituto de Prevision Militar (IPM) by stealing their money rather than investing it.
The pension fund held itself out as Merrill Lynch's agent, and IPM sued Merrill Lynch for failing to stop the misappropriation of funds.
Judge Marcus ruled that the Securities Litigation Uniform Standards Act bars IPM's claim because it was consolidated with other lawsuits during discovery. "Consolidation for any purpose" triggers the Act, which was enacted in 1998 to prevent the economy from becoming bogged down by overlapping securities lawsuits.
"The plain meaning of 'consolidation for any purpose' includes consolidation for purposes of discovery only, and we cannot ignore that meaning," Marcus wrote.
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