The Supreme Court let stand yesterday a decision knocking out an award of $1.45 million actual and $2 million punitive damages against Merrill Lynch, Pierce, Fenner & Smith, the largest firm in the securities industry, and three of its top executives.

The award, which involved Merrill Lynch's "going public" seven years ago, was made by Federal Judge James N. Meredith to St. Louis Union Trust Co. and other executors of the esate of the late Kenneth Bitting. He was a partner in the firm in St. Louis until 1959 when it converted to a private corporation. He owned 40,000 shares of its stock.

Meredith awarded the damages after finding that Merrill Lynch and the executives had violated their fiduciary duty and fraud laws by using insider information to increase the value of their holdings in Merrill Lynch at the expense of Bittings' estate.

Last August, however, the 8th Circuit Court of Appeals reversed 2 to 1, ruling that Merrill Lynch and the executives had not been shown to have acted fraudulently, in bad faith or with improper motive, and that the executors were not entitled to relief under either federal or state laws.

The executors claimed that the appelate court has sanctioned a standard of conduct that "represents a dramatic departure from the high level of integrity and fair dealing heretofore demanded of fiduciaries."