Merrill Lynch sued by ex-First Republic investors

A Merrill Lynch office building is seen in Great Neck, New York, October 30, 2007.

LOS ANGELES (Reuters) - Merrill Lynch & Co MER.N was sued on Friday by former shareholders of First Republic Bank, who accused the company of hiding billions of dollars in losses related to subprime mortgages while the companies' merger was pending.

Mark Molumphy, a lawyer for the former First Republic shareholders, said they lost about $250 million (125.4 million pounds) when Merrill's share price dropped after the losses became public weeks after the transaction closed.

Merrill agreed in January to buy First Republic for $1.8 billion in cash and stock. The transaction closed in September. The following month, Merrill announced a $8.4 billion write-down.

(Reporting by Gina Keating)