The lawsuits focused on the period between 1998 and 2000, when
web site hits seemed to count for more than actual revenues. The
companies include Ask Jeeves, Akamai Technologies, Etoys, Global
Crossing, Aether Systems, Copper Mountain Networks, VA Linux,
Priceline.com and Webvan.
The investors argued that the companies and their Wall Street
banks misled them with over-hyped research analysis and rigged the
IPOs to artificially inflate share prices, making the banks and the
corporate insiders the only winners.
The US law firm Milberg Weiss, which specialises in class
actions, represented the investors and stands to make a healthy
contingency fee from Thursday's settlement. But it could make even
more: it is now suing the 55 investment banks that handled the IPOs
and in doing so will be supported by the 309 companies – because
that was another condition of their settlement.
If that action succeeds in recovering more than $1 billion from
the banks – and it is expected to seek around five times that
figure – then the companies avoid the need to pay out. The targets
are said to include Goldman Sachs, Morgan Stanley, Credit Suisse
First Boston, JP Morgan, Citigroup, Deutsche Bank, Smith Barney and
Merrill Lynch.
The deal with 309 companies needs the approval of each company's
board of directors and a federal court judge before it ends.
Last April, ten Wall Street firms settled separate charges that
they misled investors with biased stock recommendations, brought by
New York Attorney General Eliot Spitzer, for $1.4 billion.
