No dot-com IPO class action suit
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BOB MOON: We're hearing a big sigh of relief from Wall Street. A federal appeals court has ruled the nation's investment banks won't have to face a huge class-action lawsuit for manipulating IPO stock prices, mostly during the dot-com boom. Stacey Vanek-Smith reports, the big losers were individual investors.
STACEY VANEK-SMITH: Do you remember late '90s, when all those Internet start-ups were going public? Turns out, the investment banks that managed those IPOs may have used a number of tricks to artificially boost share prices.
Merrill Lynch, Goldman Sachs and Morgan Stanley are among those accused of fudging market research to lure investors into buying. That helped to create huge profits for the firms and hundreds of millions of dollars in losses for investors.
Individual cases can still be taken up against the banks, but Georgetown law professor Donald Langevoort says those won't pack nearly the punch of a class action.
DONALD LANGEVOORT: If this had been a class action, this have probably been settled for incredible sums of money. Individual cases are going to be very hard to bring.
Langevoort says that's because most individual investors would probably only be able to claim damages totaling a few thousand dollars. He says that might not be worth it after legal fees.
In New York, I'm Stacey Vanek-Smith for Marketplace.