Merrill Lynch denies insider trading

Merchant banking giant Merrill Lynch has denied allegations of insider trading,
raised at the weekend by a member of a famous Sydney racing family.
In reports published in Fairfax newspapers on Saturday, David Waterhouse alleged
Merrill Lynch executives were involved in short-selling $55 million of blue chip
Australian stocks in January last year.
In a statement filed with the Victorian Supreme Court, Mr Waterhouse alleges Merrill
Lynch subsidiary Berndale Securities seized control of How Trading, the options
trading account he held with them, on January 14 last year, Fairfax says.
Four days later, Merrill Lynch reported a $US9.83 billion ($A12.54 billion)
four-quarter loss.
In the four days before the announcement, Berndale used the How Trading account to
short-sell $55 million of Australian shares, the Fairfax report said.
Mr Waterhouse said the details were revealed to him by Merrill Lynch staff at a
meeting before the US announcement was made.
How Trading and Berndale are involved in a $9 million dispute before the Supreme
Court, Fairfax said.
But a spokeswoman for Merrill Lynch rejected Mr Waterhouse's allegations.
"Merrill Lynch completely rejects the allegations of insider trading which have been
the subject of recent press coverage," she said in a statement.
"Merrill Lynch has already commenced proceedings to recover in excess of $9 million
owed to it by How Trading and David Waterhouse. These proceedings are set down for
trial next Tuesday."