In re IPO Securities Litigation

A panel of the Second Circuit reversed a district court order granting class action status to one of the largest securities class actions in history, In re IPO Securities Litigation.  The order affects six "focus cases" in the class action (that also includes 300 or so other consolidated actions ).  In the class action plaintiffs accused Wall Street banks of manipulating the prices of IPOs in the late 90s.  The suit was against 309 issuers and 55 underwriters and the plaintiff class had over 7 million members.  The suit alleges, among other things, illegal allocations of hot shares, laddering (agreements to purchase in the after market), and misleading analyst recommendations.  It is a whole-scale indictment of the nation's underwriting practices.  The focus cases contained the core of the important allegations against the Wall Street underwriting community.  The Second Circuit held that there were to many individual questions among class members to satisfy the commonality requirement for certifying a class.  The Second Circuit decision is a major defeat for Milberg Weiss, a major victory for Wall Street, and will have a long term dampening effects on the ease of bringing large scale securities class action litigation (unless it is reversed en banc or by the Supreme Court -- both long shots).