[New York, N.Y., October 13, 2004] The Plaintiffs' Executive Committee announced that today, the Court, in the Initial Public Securities Offering Litigation, issued a 150-page opinion and order permitting six selected focus cases, among the more than 300 coordinated cases, to proceed as actions. The actions are coordinated for pretrial purposes before U.S. District Court Judge Shira A. Scheindlin in the Southern District of New York. 

The Initial Public Offering Securities Litigation consists of more than 300 actions involving IPOs marketed between 1998 and 2000. The defendants include the companies brought public, certain of their officers and directors and 55 of the investment banks that brought them public and underwrote various follow-on offerings. The lawsuits allege that the IPO offerings were manipulated by the investment banks to artificially inflate the market price of those securities and to reap excessive compensation and that their conduct was concealed from the public, in violation of the federal securities laws. There are also allegations that they misused their securities analysts to hype the stock.

The Court’s opinion resolves issues addressed in thousands of pages of briefing and expert reports submitted by the Plaintiffs and the Underwriter Defendants over the past year regarding six focus cases presented to the Court for determination as to whether those cases should proceed as actions and to gain guidance with respect to similar issues in the remaining cases and how those cases will proceed. The six focus cases include Corvis Corporation; Engage Technologies, Inc.; Firepond, Inc.; iXL Enterprises, Inc.; Sycamore Networks, Inc. and VA Linux Corporation.  The court stated that she “intended to provide strong guidance, if not dispositive effect,” for all remaining cases. 

In certifying virtually all of Plaintiffs’ claims in the focus cases, Judge Scheindlin stated: 

“Although defendants’ arguments have raised a number of thorny problems, forcing this Court to take a hard look at the pleadings and the many submissions made in support or and in opposition to this motion, the balance tips strongly in favor of certification. Trying these cases will be an arduous task, but that is no reason to close the courthouse door to the alleged victims of a sophisticated and widespread fraudulent scheme.”

As a result of the Court’s decision, formal notice may now be sent to the many thousands of buyers of stock in companies in the focus cases regarding the pendency and prosecution of those cases. Shareholders who do not want to participate will have the right to opt out of the proposed classes or remain as part of those actions.

The Plaintiffs’ Counsel are in the process of examining more than 25 million documents, have served  numerous subpoenas on the third parties and are gearing up to conduct depositions. In addition, the court is being asked to set hearing dates for a settlement with the issuers and their insurers which would guarantee one billion dollars of recoveries in these actions.