During the late 1990s Internet boom, large investment Wall Street banks allegedly conspired to drive up prices of initial public offering prices of technology companies.
In 2001, several class action lawsuits were filed on grounds of alleged securities fraud. Citing lawyers involved in the case, The New York Times reported that the investment banks faced the prospect of making payments of billions of dollars to settle the accusations -- if they chose not to risk a trial -- involving potentially millions of investors.
The IPO lawsuit involved more than 300 individual investors, 309 issuers and 55 underwriters – that is nearly all firms on Wall Street and described by many as the largest consolidated securities class-action case ever.
Earlier this month, a three-judge panel of the Federal Court of Appeals for the Second Circuit in Manhattan rejected the cases noting the federal judge overseeing the lawsuit had erred in granting class action status to six "focus cases" out of 310 consolidated class actions that claimed fraud on the part of many of the nation's largest securities underwriters, the article said.
Wall Street firm's "scheme" of "putting in place deals to flip new IPOs to drive the stock price higher while also putting out only favorable research on the stocks they brought to market" was such an open secret that anyone who did the slightest due diligence knew about it beforehand.
The Internet boom seemingly got everybody greedy and rich, but when the so-called dotcom bubble collapsed, the plaintiffs wanted to find someone to blame. Apparently, many of the class action lawsuits that were filed in the wake of the bubble bursting were obviously more about trying to pass the blame, or so.
The rejection is probably for the best. Because these were highly risky investments, if anything, investors should be astute about their outlays, as they always should be.