Feeds

Court rejects class action status for Wall Street lawsuit

Banks breathe sigh of relief

  • alert
  • submit to reddit

Security for virtualized datacentres

A lawsuit aiming to hold Wall Street banks accountable for alleged manipulation of technology stock prices in the dotcom boom has failed to win class action status. The ruling could save the banks billions of dollars in payouts.

The suits accused Wall Street banks of colluding with investors to buy shares once a company floated on the stock markets, driving up prices in the so-called after market and making money for those favoured investors it had granted pre-flotation stock.

The suit also said that banks artificially inflated the prices of companies floated in initial public offerings (IPOs) and that they created misleading research about the firms to lure investors into buying the stock.

US legal experts predicted that the case would have been unlikely to go to trial, and would most likely have been settled by the banks. Virtually every investment bank is involved in the case and it could have cost them billions of dollars to settle.

A previous ruling from a federal judge had allowed 310 separate cases to be consolidated into six 'focus' cases. These six cases were granted class action status. Class action suits allow a large number of cases involving similar points of law to be tried together and commonly involve massive payouts because of the large numbers of claimants involved.

That was overturned, though, by a panel of three judges in a federal appeals court, which said that the cases should not have been granted class action status.

The case involved 300 investors, 309 issuing companies and 55 underwriting banks, including the biggest names on Wall St such as Morgan Stanley, Credit Suisse First Boston, Goldman Sachs and Merrill Lynch.

"It's not over," Melvyn Weiss, a founder of one of the law firms acting for the claimants, told the New York Times. "We have the right to seek a review by the entire panel of the Second Circuit. I think the decision doesn't reflect a real understanding of how people get defrauded in our society."

Copyright © 2006, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

Security for virtualized datacentres

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Apple CEO Tim Cook: TV is TERRIBLE and stuck in the 1970s
The iKing thinks telly is far too fiddly and ugly – basically, iTunes
Huawei ditches new Windows Phone mobe plans, blames poor sales
Giganto mobe firm slams door shut on Microsoft. OH DEAR
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Apple Pay is a tidy payday for Apple with 0.15% cut, sources say
Cupertino slurps 15 cents from every $100 purchase
Forget silly privacy worries - help biometrics firms make MILLIONS
Beancounter reckons dabs-scanning tech is the next big moneypit
Microsoft's Office Delve wants work to be more like being on Facebook
Office Graph, social features for Office 365 going public
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.