Beginning in late 2000, investors brought class action lawsuits against various companies that issued securities (issuers), some of their officers and directors, and certain of the investment banks that underwrote those securities (underwriters), alleging violations of the federal securities laws in connection with initial public offerings (IPOs). The plaintiffs alleged that the underwriters manipulated the price of those securities, artificially inflating the trading price, and that the issuers and underwriters failed to disclose material information about the manipulation. Ultimately, 309 separate class actions, involving 309 separate issuers were coordinated for pretrial purposes before Judge Shira A. Scheindlin in the United States District Court for the Southern District of New York. Although each of the 309 cases is a distinct class action bearing its own separate caption and case number, the cases are collectively coordinated and litigated for pretrial purposes under the caption: In re IPO Securities Litigation, 21 MC 92 (SAS).
During the course of the litigation, the parties engaged in extensive motion practice and discovery. Of particular significance were plaintiffs' motions for class certification. In 2004, plaintiffs had sought class certification in six "focus" cases (denoted with an asterisk under the "Amended Complaints" link), to serve as a precedent in the remaining cases. Although the District Court granted plaintiffs' motion, the United States Court of Appeals for the Second Circuit reversed the District Court's order. As a result of this development, the previously reported proposed partial settlement, which had been reached in 2005 with the issuers, was withdrawn by the parties.
To address the decision of the Second Circuit on class certification, plaintiffs filed amended complaints in the six focus cases (available for review at the "Amended Complaints" link) and filed a new motion for class certification. Defendants in those cases filed motions to dismiss challenging the sufficiency of the complaints and opposed plaintiffs' new motion for class certification.
THE $586 MILLION GLOBAL SETTLEMENT
With various substantive and procedural motions pending before the Court, in the summer of 2008, the parties engaged in a formal mediation process, supervised by two former judges, to discuss a global resolution of the entire coordinated litigation. The mediation took several months. Ultimately, the parties reached an agreement to resolve all 309 cases as against all defendants (the "Global Settlement"). The Global Settlement was memorialized in a Stipulation and Agreement of Settlement, dated as of April 1, 2009 (the "Settlement Agreement"). The Settlement Agreement provided for a $586 million recovery in total. This total amount is divided over the 309 cases. The specific amount designated for each case will, in the first instance, be made available to the members of the Class in that case who have submitted valid Proofs of Claim. As set forth in the Settlement Agreement, the classes are defined as follows:
[A]ll Persons who purchased or otherwise acquired any of the Subject Securities at issue in such case during the Settlement Class Periods applicable to such case and were damaged thereby.
- Subject to the review provisions provided in [Paragraph 20 of the Settlement Agreement], excluded from the Settlement Classes is each Person, other than a Natural Person, that was identified as a recipient of an allocation of shares from the "institutional pot" in the IPO of any of the 309 Subject Securities, according to a list derived from the final "institutional pot" list created at the time of each IPO by the lead Underwriter in that Offering ("Excluded Allocants").
- Also excluded from the Settlement Classes are (i) each Person that currently is or previously was a named defendant in any of the 309 Actions (hereafter "Named Defendant"), (ii) any attorney who has appeared in the Actions on behalf of a Named Defendant, (iii) members of the immediate family of any Named Defendant, (iv) any entity in which any Excluded Allocant or Named Defendant has or during any of the class periods had a majority interest, (v) the legal representatives, heirs, successors or assigns of any Excluded Allocant or Named Defendant; and (vi) any director, officer, employee, or beneficial owner of any Excluded Allocant or Named Defendant during any of the Settlement Class Periods. Notwithstanding the prior sentence, a person shall not be excluded from the Settlement Classes merely by virtue of his, her or its beneficial ownership of the securities of a publicly-traded Excluded Allocant or Named Defendant.
To be eligible to participate in the Settlement, a Class Member had to satisfy the foregoing criteria. The express terms of the Global Settlement, including information about the subject securities and the Settlement Class Periods, are set forth in the Settlement Agreement and the corresponding papers.
The Global Settlement was submitted to the District Court for review and preliminary approval on April 2, 2009. On June 9, 2009, the Court issued an Opinion and Order preliminarily approving the settlement. Formal notice was thereafter mailed to shareholders, based upon records received from the defendants.
A settlement fairness hearing was held on September 10, 2009. The Court entered an Opinion approving the Settlement, the Plan of Allocation and awarding Plaintiffs’ Counsel attorneys’ fees and reimbursement of expenses on October 5, 2009. Orders and Final Judgments were thereafter entered in all 309 cases. A number of appeals were filed with respect to the approval of the Settlement and the award of attorneys’ fees. One appellant even sought to appeal to the United States Supreme Court. The Settlement became final in January 2012 when the United States Supreme Court rejected the final appeal.
The Motion requesting the Court's approval of the administrative determinations accepting and rejecting the Proofs of Claim has been approved, and an Order authorizing the distribution of the Net Settlement Fund has been entered. To view a copy of this Distribution Order, click here. It is anticipated that the Net Settlement Fund will be distributed to accepted claimants at the end of November.
The Court has appointed a Plaintiffs' Executive Committee to manage and supervise the litigation on behalf of the plaintiffs in these actions. The members of the Plaintiffs' Executive Committee include: Bernstein Liebhard LLP, Milberg LLP, Barroway Topaz Kessler Meltzer & Check LLP, Stull Stull & Brody LLP, Wolf Haldenstein Adler Freeman & Herz LLP and Howard B. Sirota. Contact information for these firms can be found at the Plaintiffs’ Executive Committee link on this website.
NOTE: This website is being provided as a service to potential Class Members. The information provided is in summary form and is not intended as a complete explanation of your rights, nor does it serve to provide legal or professional advice. To become more informed about the litigation, you are directed to review carefully the Global Settlement, Briefs and Court Documents, Amended Complaints and Case Documents, for which you will find links on this website.