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| 2001 News and Press Releases |
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HEADLINE ARCHIVED:
IPO Class Action -- Dot-Com Sues Underwriter Credit Suisse Is Target In Novel Securities Case
By: Jason Hoppin
The National Law Journal. Monday, November 5, 2001
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Excerpt: TALK ABOUT A can of worms. Earlier this month, a federal judge in Florida transferred to New York a class action filed by a dot-com against the underwriter that took it public. The suit, believed to be the first in which an issuer is claiming that an underwriter cheated it of proceeds from its initial public offering,will now be heard by Judge Shira Scheindlin of the Southern District of New York. Scheindlin is already presiding over 800 securities suits that investors have filed against underwriters, accusing them of fraud in the handling of late-1990s initial public offerings. Because the Florida case, filed by Mortgage.com against Credit Suisse First Boston, seeks relief for all companies the underwriter took public, it puts scores of dot-coms in the position of being both defendants and potential plaintiffs in the related cases in front of Scheindlin. "Well, I think no one has any idea how it's going to work yet," said Mortgage.com attorney Steven Toll, managing partner of Cohen, Milstein, Hausfeld & Toll in Washington, D.C., when asked about the dual role that dot- com companies are being asked to play. Florida U.S. District Judge Patricia Seitz transferred MDCM Holdings Inc. v. Credit Suisse First Boston Corp., No. 01-Civ. 2003, on Oct. 10. The suit was filed by a bankruptcy assignee sifting through Mortgage.com's ashes. It's too soon to say how the Mortgage.com case will affect the investor-filed actions. But it presents several unique scenarios. For example, in the investor actions, issuers have maintained a united front with underwriters, even though some of the former wonder why they've been named. They reason that even if the allegations of "laddering" and other allocation abuses are true, issuers wouldn't have benefited from them.
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