Lawyer Mel Weiss says the deal 10 Wall Street banks struck with regulators may not help investors who are suing to recoup big losses.
One of the major goals of U.S. regulators who struck a $1.4 billion settlement on Apr. 28 with 10 investment banks over their research has been to give angry investors enough ammunition in their lawsuits.
But Mel Weiss, a founding senior partner of Milberg, Weiss, Bershad, Hynes & Lerach, believes the pact may not be as helpful as it seems at first glance.
Weiss has a lot at stake in the outcome. His law firm is synonymous with shareholder suits and has filed more than 100 cases against dozens of public companies and investment banks alleging initial-public-offering fraud and price manipulation. On numerous occasions, he has said he believes Wall Street conspired to manipulate the stock market in the way investment banks handled IPOs and other hot stock issues.
Q: What do you think of the settlement?
A: I’m worried that banks will try to use this as an argument that prior to this so-called new rule separating analysts from investment bankers, there was no rule. So they didn’t violate anything. And they’re going to try to wriggle out of civil liability for the victims with that argument.
. . If anybody in the regulatory system or in the hierarchy of these companies was aware that there was a breakdown between analysts and bankers and didn’t do something about it, they should be hung.
Q: You’re working on a case alleging that 55 investment-banking firms and 309 companies manipulated the high-tech IPO markets. Could this hurt your case?
A: It could. The banks now have arguments they wouldn’t have otherwise had. I would have preferred it if the government said this was always a violation, and now we’ll enforce it . .
Q: What about the documents that regulators are releasing as part of the settlement? Is that one of the favorable things to come out of this?
A: The documents will be helpful for people in arbitration proceedings because their lawyers don’t have the ability to get those documents. Arbitration doesn’t permit discovery.