ENID, Okla., 06/10/03
The one-year statute of limitations for a defamation action by Merrill Lynch against author, Keith Schooley, has run. In his book, Merrill Lynch: The Cost Could Be Fatal–My War Against Wall Street’s Giant (2002, Lakepointe Publishing, 282 pp.), Schooley alleges wrongdoing at Merrill Lynch ranging from brokers to senior management, including two cover-ups of a widespread cheating scandal. He also alleges that the firm employed deceptive practices during a judicial proceeding; made misrepresentations to regulators; and has a corrupt corporate culture.

“Merrill Lynch’s silence concerning my allegations is, in my opinion, tantamount to an admission of ‘guilt’,” Schooley says. “Why else would a company that people are supposed to trust with their money not defend the reputation of its franchise name?”

Schooley recently sent a letter to the SEC urging it to examine what he believes is the clear failure of Merrill Lynch’s outside directors to appropriately respond to his warning that they had been deceived by the firm’s senior management and/or inside directors concerning alleged wrongdoing.

“I understand that the SEC’s stated policy is to take action against outside directors who seriously neglected their duties,” Schooley wrote. “While the underlying wrongdoing that I reported may not be on the scale of Enron, nevertheless, it is disturbing. The question remains – at what point do you hold the directors responsible? Is it only after an Enron-like debacle, or prior to?”

Schooley’s book has generated controversy. Nationally known publishing legal guru, Ivan Hoffman, a Los Angeles attorney, advised Schooley prior to publication not to go forward with the book because he would likely be a defendant in lawsuits in multiple jurisdictions. All primary underwriters of media perils insurance declined to provide coverage for the book. Famed Oklahoma attorney, Stephen Jones, has called the book dangerous because it “names names, takes no prisoners, and is explosive.” And, a publicized booksigning event was recently cancelled because of pressure brought to bear by Merrill Lynch employees.

As to Merrill Lynch’s behavior and silence, Schooley says, “Corporate integrity, or the lack thereof, flows from the top down. As they say, ‘The cover-up is worse than the crime.’ Frankly, the disinfectant of sunlight seems to make these guys run for cover.”