Merrill settles fund suit

December 6, 2001 Posted: 1216 GMT

LONDON (Reuters) -- U.S. bank Merrill Lynch & Co and Unilever PLC's pension fund have agreed an out of court settlement to end a 130 million pound ($185 million) negligence suit brought by the Anglo-Dutch consumer goods firm, a lawyer for Unilever said Thursday.

Merrill-owned Mercury Asset Management and the Unilever Superannuation Fund did not reveal details of the deal, which came after eight weeks of what became the glamour trial of the fund management industry. The judge had been expected to reach a verdict early next year.

Ken MacLean, lead junior council for Unilever, announced the settlement at Britain's High Court, saying he was "happy to tell your Lordship that the parties have agreed terms."

The case, which highlighted the issue of whether fund management companies can be held responsible when their investment decisions turn out to be disastrously wrong, has attracted huge interest from Britain's pension fund industry.

Unilever's pension fund sued Mercury Asset Management, claiming lax internal controls allowed a fund manager to take excessive risks with its portfolio. Merrill, which countersued for 580,000 pounds in unpaid fees, denied negligence.

A win for Unilever had been seen as opening the floodgates to a slew of similar cases against underperforming fund managers.

Shares of Merrill Lynch (MER: Research, Estimates) gained $2.48 to close at $52.52 Wednesday and Unilever's (UN: Research, Estimates) American traded shares fell 21 cents to close at $55.69.