Banks sued over dotcom float fix allegations
Net investors not happy. But we knew that
A group of New York banks face legal action after allegations of dotcom flotation rigging.
At least 21 lawsuits have already been filed against ten banks in courts in Manhattan, today's Times reports. Angry investors claim that the IPOs of dotcoms such as Marketwatch.com, MP3.com, DoubleClick and Ariba were a fix.
Experts estimate that another 60 class-action lawsuits are currently in the preparation stages.
If successful, Internet boom investors who saw share prices crash, will be able to apply for damages. The banks named in the lawsuits include Credit Suisse, First Boston, Merrill Lynch, Morgan Stanley, Bear Stearns and Salomon Smith Barney.
The lawsuits come during a probe by the Justice Department and the Securities and Exchange Commission (SEC) into banks' behaviour in the dotcom boom.
Investigators are looking into whether bankers got kickbacks (effectively bribes), or used laddering techniques - where investors promise to buy stock at a set price after a flotation, which forces up the share price in the short term. ®