Merrill Lynch is being sued by Iconix.

Iconix is suing Merrill Lynch for $13 million. Photo: Mario Tama, Getty Images

It's time for banks to pay up. Well, at least that's what Iconix Brand Group Inc. has in mind.

The parent company for Candie's, London Fog, Rampage and Badgley Mischka among others, is suing Merrill Lynch, Pierce, Fenner & Smith Inc. for a whopping $13 million plus legal costs and unspecified punitive damages, reports WWD.

Iconix hired the investment bank as a financial adviser in 2006 but now in a complaint filed in a Manhattan federal court, the company is accusing Merrill Lynch of fraud over the sale of $13 million of devalued auction rate securities.

Lawyers for the fashion company alleged that the financial adviser represented the securities to be safe and highly liquid (finance jargon for easy to sell). Subsequently, Iconix invested more than $100 million in the securities in 2007.

According to Iconix, Merrill Lynch then encouraged it to invest in Anchorage high-risk auction rate securities because it hadn't attracted enough bidders.

Iconix allegedly followed the advice, buying a cool $13 million worth of the high-risk securities while Merrill Lynch dumped its own holdings of Anchorage just days later. The fashion company further alleges that it was then stuck with the worthless securities and filed the lawsuit.

If you think $13 million is a lot, then how about $20 million? This iconic fashion company was recently hit with a huge lawsuit.