Reuters reports that the S.D.N.Y. court presiding over the IPO allocation cases has granted class certification in six “focus” cases that have been used to test the sufficiency of the overall allegations. The plaintiffs have sued underwriters in connection with over 300 initial public offerings. The cases generally allege that the defendants ramped up trading commissions in exchange for providing access to IPO shares and required investors allocated IPO shares to buy additional shares in the after-market to help push up the share price.
Quote of note: “U.S. District Judge Shira Scheindlin said that if she had rejected the class action request, the companies ‘would have essentially defeated the claims without ever having been compelled to defend the suits on the merits. In their zeal to defeat the motion for class certification, defendants have launched such a broad attack that accepting their arguments would sound the death knell of securities class actions.'”