October 29, 2008 1:00 PM
Will $700 Million Finally Settle Decade-Old IPO Suit?
Posted by Zach Lowe
Ah, for the late 1990s, when every dot-com company was a guaranteed stock market hit and every IPO meant a bounty for investors. Until, of course, that bubble burst and the litigation followed--including a lawsuit filed in 2001 against more than 300 tech companies and 55 underwriters who allegedly rigged IPOs to cheat investors.
That suit is finally ready to settle, ending a saga that saw the lead plaintiffs lawyer, Mel Weiss, convicted and imprisoned and the original plaintiffs class decertified in 2006.
We know a settlement is likely because Joel Haims, a partner at Morrison & Foerster, one of many Am Law 100 firms on either side of the case, submitted a letter asking a federal judge in Manhattan to delay hearings until January so the parties can finalize a settlement, according to Bloomberg.
Judge Shira Scheindlin of U.S. District Court in Manhattan granted the delay, court papers show.
Haims and nearly a dozen other lawyers involved in the case did not immediately respond to messages from The Am Law Daily.
The suit alleges the banks and companies arranged for institutional investors to buy up huge chunks of tech stocks after IPOs to artificially inflate the stock price investors would have to pay down the line. Those early buyers allegedly kicked back some of their profits to the companies and the banks who served as underwriters--a group that includes Morgan Stanley, Goldman Sachs, Merrill Lynch and just about every other bank whose name you know.
A settlement for $700 million would be far less than the $12.5 billion Weiss once demanded -- a demand some of the plaintiffs lawyers thought of as unrealistic, Bloomberg reports. At least one lawyer, Howard Sirota, urged Weiss to accept a $3 billion or $4 billion settlement before a federal appeals court in New York tossed the class action case in 2006, Bloomberg reported then. Sirota's boutique (temporarily) went out of business without the anticipated settlement profits, and Weiss dismissed Sirota's criticism, calling him "not a good lawyer."
According to Haims's letter, the lead lawyers for the defendants include Gandolfo DiBlasi of Sullivan & Cromwell and Jerold Solovy of Jenner & Block. Other Am Law firms for the defendants include Kirkland & Ellis (for Morgan Stanley) and Morgan, Lewis & Bockius for several defendants.Make a comment