New York banks involved in the flotation of dot.coms during the
late 1990’s internet boom are facing 21 class action lawsuits over
allegations of flotation irregularities, according to a report by
The Times.
The actions contend that bankers agreed to buy stock at an
agreed price following flotation to help inflate the share price in
the short term and that they accepted bribes.
The lawsuits have now been filed against ten banks including Credit
Suisse First Boston, Merril Lynch, Morgan Stanley Dean Witter, Bear
Stearns and Salomon Smith Barney. Experts estimate up to sixty more
class action lawsuits are currently being prepared. The US Justice
Department and the Securities and Exchange Commission are also
investigating the banks’ behaviour during the flotations.
If the actions are successful they would open the door to actions
from other investors, who have seen share prices subsequently
crash, to claim damages.
Robert Baker, managing director of communications for Credit Suisse
First Boston told The Times, “we believe the lawsuits are without
merit and we intend to defend them vigorously”.
