NEW YORKLawyers for investors and the state of Louisiana, as expected, refiled a massive federal class action lawsuit Tuesday against 33 dealers of Nasdaq stocks, alleging price fixing and other antitrust violations involving 1,659 Nasdaq-listed stocks.
August 22, 1995
On Aug. 4, U.S. District Judge Robert W. Sweet in New York dismissed the original lawsuit because he said it didn’t name the individual stocks and therefore wasn’t specific enough. But he ruled that other aspects of the suit were strong enough to allow a case to go forward, and he gave the group permission to refile it.
Robert A. Skirnick, one of the lead lawyers for the investors, said the new complaint is identical to the original except that it lists the stocks and gives the specific time periods during which stock prices allegedly were manipulated. The stocks include those of most of the biggest companies listed on Nasdaq, including Microsoft, Apple Computer, Intel and United States Health Care. The stocks specified in the suit make up 29 percent of the 5,776 stocks and other securities listed on Nasdaq as of the end of July.
The suit charges that the dealers colluded to keep their profits artificially high by maintaining wide spreads on the stocks. Spreads are the gap between the price at which dealers offer to buy a stock, and the higher price at which they offer to sell. Nasdaq dealers have strongly denied wrongdoing and said pure market forces determined the spreads.
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Antitrust experts have said if the suit is successful, it could be very costly for the dealers, which include many well-known Wall Street investment houses. Antitrust law allows for treble damages. Catherine A. Ludden, a lawyer designated as spokeswoman by law firms representing the 33 dealers, was on vacation Tuesday and couldn’t immediately be reached for comment. Other lawyers for the dealers didn’t immediately return calls seeking comment.
The Justice Department’s antitrust division is conducting an investigation of alleged price fixing on Nasdaq and recently notified dealers that it was moving toward filing a civil action against them and urged them to begin settlement talks. The dealers so far have not responded. The Securities and Exchange Commission also is conducting an investigation of alleged wrongdoing on Nasdaq.
In a separate development related to Nasdaq, the SEC ordered Nasdaq to hire an outside firm to review the ability of its computer system to handle heavy trading volume. Record trading volume on Nasdaq had led to a series of computer failures, prompting emergency measures by it to reduce the load on its computers. Nasdaq spokesman James D. Spellman said Nasdaq hired the accounting and consulting firm Coopers & Lybrand to do the study.
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