Lehman Brothers Holdings Inc. ("Lehman" or the Company) (OTC: LEHJQ or LEHMQ) is an American global financial services firm founded in 1847.
The original lawsuit charges that Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by issuing false and misleading analyst reports on RealNetworks, a global provider of software products
and services for internet media delivery, in a bid to win or maintain lucrative banking and advisory work from the Company. As a result of Defendants' false and misleading statements, the market price of RealNetworks common stock was artificially inflated, maintained or stabilized during the Class Period.
On or about April 28, 2003, the United States Securities and Exchange Commission ("SEC") issued a Complaint charging Lehman with violating numerous rules of conduct of the National Association of Securities Dealers, Inc. ("NASD") and the New York Stock Exchange, Inc. ("NYSE"), by issuing false and misleading analyst reports on numerous companies, including RealNetworks. The Complaint describes the influence and control exerted by Lehman's investment bankers on its supposedly independent research analysts, and details how positive ratings and research reports on RealNetworks issued by Defendants to the public were contrary to Defendants' more negative assessments of the Company's true value and prospects. Lehman eventually settled these charges by the SEC for the payment of $50 million.
According to a Decision of Interest from the New York Journal of Law dated April 5, 2004, Lehman's motion to dismiss the lawsuit on five separate grounds was denied in its entirety. In its motion, the Company alleged that: First, the Plaintiffs failed to satisfy the pleading requirements of Federal Rule of Civil Procedure 9(b) and the Private Securities Litigation Reform Act ('PSLRA'). Second, that Plaintiffs have failed to meet the PSLRA standard for pleading scienter. Third, that Plaintiffs' claims should be dismissed pursuant to the "bespeaks caution" doctrine because the reports in question expressed numerous reservations about RealNetworks and the risks of investing therein. Fourth, that the Complaint fails to adequately allege "transaction causation" (as it is called in securities law parlance), or "reliance" (as it is otherwise referred to in the law of fraud). Fifth, that the Complaint fails adequately to allege "loss causation" except in a way that renders Plaintiffs' claim barred by the appropriate statute of limitations. The court rejected all those claims.
According to the docket posted, on November 23, 2004, the Court issued an Order granting the Defendants’ Motion for Summary Judgment in its entirety and the Plaintiffs’ claims were dismissed with prejudice. The Plaintiffs have filed a Notice of Appeal. On April 8, 2005, the Court entered the Mandate from the Second Circuit Court of Appeals. The appeal was dismissed with prejudice, without costs and without attorneys’ fees.
