The markets got a boost this week when Federal Judge Milton Pollack of the Southern District Of New York dismissed two potentially dangerous lawsuits against Merrill Lynch. One suit was a class action over allegedly biased research reports on two internet stocks brought public by MER. The other was brought on behalf of shareholders in a mutual fund managed by MER. Judge Pollack has been on the bench forever and is generally pretty well regarded. Thus, some observers think his highly critical assessments of the plaintiffs' cases will carry a fair amount of weight. Basically, he said they were sore losers who got what they deserved. His comments have been picked up and carried by a number of commentators who seem eager to pile on to investors who bought into the bubble market. I haven't read the actual decisions, but I think there is a very good chance they will be overturned on appeal. The cases were at a preliminary stage and hadn't gone to trial. Unless the dispositive facts were undisputed, it is basic law that the plaintiffs must be given the benefit of the doubt at this stage and their allegations accepted as true. Thus, if they alleged they relied on MER research, it would be error for the Judge at this stage to rule that they hadn't. The lawyers who bring these types of cases are clever and very savvy. I find it hard to believe they would invest their time in a case that couldn't get past a motion to dismiss. Judge Pollack's quoted comments are likewise troubling. He seemed outraged over the whole idea of "speculators" expecting a basic level of honesty from an investment bank or mutual fund manager. In effect, he put the victims on trial, rather than vice versa. He also seemed to think it was significant that the plaintiffs in the internet case were not MER customers. If there was fraud on the market, I don't see how that can prevent them from suing. He also rejected the infamous internal e-mails as insignificant. How he can do that on a motion to dismiss is beyond me. MER itself found them embarrassing enough that they coughed up $100 million to Eliot Spitzer. I think the Court of Appeals is likely to view this decision with great skepticism, despite the judge's reputation. He seems to have let his distaste for speculators and the internet bubble to cloud his legal reasoning.