US Court raises the bar

Author: | Published: 1 Apr 2007

In re Initial Public Offering Securities Litigation arose from the consolidation of complaints filed by thousands of investors against more than 300 issuers, hundreds of their individual officers and more than 50 underwriters. The action alleged that the defendants had engaged in a scheme to defraud investors in newly public companies by requiring investors who were allocated IPO shares to also purchase shares in the aftermarket, sometimes at escalating prices; requiring undisclosed compensation to be paid to underwriters; and using analysts to artificially inflate the value of the issuers' securities. The complaints alleged violations of Section 11 of the Securities Act (prohibiting false or misleading securities registration statements) and Section 10(b) of the Securities Exchange Act (prohibiting any manipulative or deceptive device or contrivance in connection with the purchase or sale of a security).

Class certification requirements

Under Federal Civil Procedure 23, a class cannot be certified unless:

the class...