According to a Press Release dated August 21, 2001, Judge Milton Pollack dismissed this securities fraud lawsuit. Judge Pollack wrote in the order that the pleading improprieties in the complaint are gross and unrestrained and that the repetitive character of the improprieties is unmitigated. Pollack said that that the Private Securities Litigation Reform Act of 1995, a federal law that "heightens pleading standards for federal securities law class actions," takes aim at abusive litigation. He further said that the complaint demonstrated "an abuse of the tenets of federal pleading and to say the least is in grossly bad taste." Although he was highly critical of the litigation, he ruled that the plaintiffs could refile the complaint refined with "proper allegations" within 30 days. The complaint was never refilled.
The original the complaint alleges that defendants violated the federal securities laws by issuing materially false and misleading statements designed to, and successful encouraging, individual investors, including members of the Class, to purchase securities of Amazon based not on objective analyses, but rather on defendants' desire to attract and retain Amazon's investment banking business. Furthermore, the complaint alleges, that defendant Meeker's ratings, recommendations, and positive comments regarding Amazon during the Class Period were also improperly influenced by her desire to increase her undisclosed personal compensation, which depended in large part upon the amount of investment banking business she generated for defendants.
Further, the complaint alleges Specifically, Meeker's conflicts of interest remained undisclosed as she issued "inflated" ratings and recommendations for Amazon. Meeker knew that the financial condition and future business prospects of Amazon did not support her positive comments and recommendations, but she nevertheless issued positive reports encouraging investors, including members of the Class, to purchase shares of Amazon even in the face of legitimate contrary research entering the marketplace. Meeker knowingly issued inflated ratings for the purpose of improperly benefiting herself and Morgan Stanley.