Posted on 02/20/2003 2:56:19 AM PST by Liz
In a win for millions of disgruntled investors, a federal judge said the nation's top investment banks must defend against claims they rigged the IPO frenzy of the late 1990s. The 55 banks, including Goldman Sachs and Credit Suisse First Boston, had hoped Manhattan Federal Judge Shira Scheindlin would accept their request to dismiss the accusations.
Her refusal yesterday means the banks must either settle the civil charges or go before a jury.
Lead plaintiff's attorney Melvyn Weiss said he estimated damages could reach as high as "many billions" of dollars.
"Now the floodgates of discovery are opened wide," Weiss said, applauding the ruling. "We're finally going to get into the books and records, what I refer to as the bowels of the investment bankers' [IPO] marketing activities."
Weiss said he'll apply for class-action status for the action in coming months.
The civil allegations actually comprise hundreds of separate cases naming 55 underwriters and 309 tech and Internet companies as defendants.
The general accusation is that the defendants "artificially" supercharged IPOs with schemes that ensured stratospheric first-day pops, hid research analysts' conflicts-of-interest and enriched a few.
One alleged scheme required that well-connected investors invited to buy pre-IPO shares of a particular company also commit to buying full-price shares soon after they hit the open market, creating the illusion of strong demand for an offering and feeding the runaway Internet bubble, the complaint states.
IPO companies named in the investor complaint included Global Crossing, Agency.com, MP3.com, Buy.com, eToys.com and DrKoop.com.
Scheindlin's 238-page ruling wasn't a decision on merits of the case, rather a decision that investors provided enough material to support some of their claims. If the allegations are true, the bankers' conduct "was so obviously manipulative that it could not have been done inadvertently," she wrote.
A spokesman for Goldman Sachs declined to comment. A CSFB spokesman said his firm was reviewing the decision.
Experts expect the banks to enter into settlement talks rather than allow attorneys to poke through their records and risk a drawn-out courtroom battle.
"At this point the investment banks have to think seriously about settling," Adam Pritchard, a securities law professor at the University of Michigan told Reuters. "If they lose (at trial) damages could be in the billions."
The SEC and the NASD have been probing bubble-era IPOs for more than a year. FleetBoston and Credit Suisse First Boston have paid million to settle allegations they improperly distributed hot IPO shares.
The SEC and the NASD have been probing bubble-era IPOs for more than a year.
Sometimes these things take time, but as with the Florida prof---sometimes time's up and the gig is up.
The demRats stole and , in California, are still stealing dreams from those who deserve better.
Idiots.. The whole lot of 'em! From Clinton on down to the lowest POS in local gov't. The demRatic unprincipled party. Power Uber Alles... and at any cost.
Oh... That's classic phraseology!!!
That goes right along with their "Peace at ANY Price!"
You should become a Republican speech writer!!!
Yep, yep, yep!!
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