MANHATTAN (CN) - Merrill Lynch sued a Connecticut securities firm, claiming 3 C Capital told it to buy more than $600,000 in securities, though it didn't have the money to pay for it.
Merrill Lynch Pierce Fenner & Smith sued 3 C Capital LLC, of Norwalk, and its CEO Michael P. Tracy, in Federal Court.
"Defendants perpetrated what amounted to a 'free-riding' scheme upon plaintiff when they directed Merrill Lynch to purchase, for 3 C, securities having a market value of $600,000 - despite the fact that defendants, unbeknownst to Merrill Lynch, lacked the financial ability to pay for the purchase," Merrill Lynch says in the lawsuit.
As could be expected, when the securities sank instead of rising, "defendants failed to pay for them," Merrill Lynch says. It claims the crooked deal cost it $228,000.
Merrill Lynch wants the money, and damages for securities violations, breach of contract and common law fraud.
It is represented by Lloyd Clareman.