DENVER (CN) - Shareholders of the now-defunct oil company Solv-Ex were unable to revive their lawsuit accusing Martin Zweig and his entities of short-selling Solv-Ex stock using Merrill Lynch prime brokerage accounts.
Merrill Lynch had loaned $4 million to Solv-Ex CEO and principal shareholder, John Rendall, in March 1997 and used his shares as collateral. About a month later, Merrill Lynch demanded repayment in full and started selling Rendall's shares on the open market when he could not pay. The share price of Solv-Ex stock plummeted from $13 on April 1 to slightly under $4 on June 30, forcing Solv-Ex into bankruptcy.
Approximately 120 shareholders sued Zweig, his entities and Merrill Lynch for their alleged role in the company's demise. The complaint also blames "a wave of bad publicity, federal criminal investigations and lawsuits" for Solv-Ex's problems, the ruling states.
The federal appeals court concluded that the Securities Litigation Uniform Standards Act barred their claims, regardless of any contemplated amendments. "Plaintiffs could not have saved their complaint by withdrawing a few of the counts," Judge Briscoe wrote.
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