Securities Fraud Suits Hit Record Number
Marie Price The Journal Record, THE JOURNAL RECORD
A record number of 263 federal class-action lawsuits have been filed this year alleging securities fraud, compared with 201 for all of 2000, PricewaterhouseCoopers reported Monday.
Last year, only eight of the cases were filed in federal courts that make up the 10th U.S. Circuit Court of Appeals -- which includes the three federal court districts in Oklahoma -- nine in 1999. Only one such lawsuit was actually filed this year in Oklahoma, a Western District case involving Ada-based Pre-Paid Legal Services.
Not surprisingly, in 2000, because many of the companies sued are headquartered in New York and California, more than one-third of the cases were filed in the Second and Ninth Circuits. In 2000, 44 were filed in the Ninth Circuit (California), 40 in the Second Circuit (New York). Last year, the spread was more dramatic, with 52 cases filed in the Ninth, only 26 in the Second.
The increase for the year was fed in large part by 143 lawsuits related to initial public offerings or IPOs, naming underwriters and companies that have recently gone public as defendants.
Many of these, what are termed "laddering cases," allege that the companies and their underwriters allocated shares in IPOs in exchange for excessive, undisclosed commissions, plus investor guarantees to purchase additional shares in the aftermarket. …