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| 2001 News and Press Releases |
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HEADLINE ARCHIVED:
Wall Street v. Foley Square?
By: Barry Rehfeld
American Banker. Monday, October 15, 2001
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Excerpt: Let it go, your honor. That's the message Wall Street is sending today to U.S. district judge Shira A. Scheindlin in New York. It represents the latest twist in one of the biggest legal cases to hit the financial community. Underwriters including Goldman Sachs, Merrill Lynch, Citigroup's Salomon Smith Barney, and Credit Suisse First Boston are among the defendants in some 800 lawsuits filed by investors in more than 150 companies that had initial public offerings, most of them between 1999 and 2000. They are accused of illegally favoring some clients in selling them shares in hot IPOs. The lawsuits stem from the hammering investors took when the market tanked, and IPOs clearly were not spared in that collapse: 126 new offerings out of 547 recently sold at under a buck. Federal investigations into whether Wall Street got IPO trading kickbacks angered investors and swelled the rolls of those seeking damages. The suits are another heavy burden Wall Street has to shoulder in its already weakened state, and could have a big impact on how they do business. Judge Scheindlin, 55, got the job of handling the load, which has grown dramatically in the past few months and is still growing. Her first major hurdle was turning them into a massive class action, but before she could do that she had to deal with the defendants' campaign to dump her. In today's scheduled brief they will ask her to step down from the case because, they claim, she has a conflict of interest -- she and her family had bought shares in some of the IPOs in question. Not everyone is on board. Morgan Stanley and Dain Rauscher have refused to join their fellow defendants in the campaign to have her removed from the case. "She's an excellent and fair judge," says Donald Kempf, Morgan Stanley's general counsel. "She's moving it along expeditiously, and we like that because we don't think (the investors) have a case."
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