Holy Guilty Plea, Batman
For those of us in, out or vaguely related to the class action world, this is huge.
For my 4 readers who might not know what the firm does, here's the common woman's background synopsis of a securities class action case (and this is just my simplified way of doing it and bears no resemblance to the firm and how they actually do business.) :
Company X announces that they have the BEST do-dad EVER. They are going to make a BAZILLION dollars on it. So, you read about the company, how well they're doing and this great new product so you buy stock. A few days, weeks or months later, Company X announces that they have to restate earnings or something of that effect because the gizmo isn't working and won't hit the stores until 2010 or whatever. "Oops," they say. "Our bad." Ok, that sucked, you just lost your money 'cause these clowns made promises they didn't keep.
On top of this, there's a little thing called a Form 4 that insiders in a company have to file when they sell stock in their company. So, if the insiders sell stock AFTER the FABULOUS announcement and before the gee-we-suck announcement, that's available for all of us to see.
Company X can now be sued for lying to shareholders to drive up the price of the stocks so the insiders can make money and then harming the stockholders.
Bad Company X. BAD, BAD Company X.
That's how I like to explain securities class actions. I'm not saying its right or wrong. I'm not saying that these companies do it on purpose or by accident in the normal course of business. I'm not here making any judgements. (I'd never do that in writing.)
The reason I say all this...
This investigation has been going on since Bush II took office. For it to finally result in a plea, holy wow. (And, BTW, for the four reading this who really don't care, I can only imagine the hundreds of millions that have been spent over the years to result in one plea of one attorney.)
ONE PLEA. This didn't stop the securities class action business. If you look at the numbers of cases filed by Milberg or Lerach, I'm sure that they've dropped. But, I'm sure if you looked at the number of cases filed in general, that hasn't fallen much. Now, instead of the 800lb gorilla, or even the two 400lb gorillas (after Milberg split), you're looking at armies of wee gorillas. (I'm sure the attorneys with their smaller firms are loving being called wee gorillas, but I digress.) All I'm saying is that the attorneys are still out there, as are the class actions. Sorry current administration, you didn't conquer the class action nation, which is what I think they were trying to do.
So, Jenna, what did all that money and investigation really accomplish?
A damn fine question and one I hope much more knowledgeable writers on this subject cover.
The next question, for the kids playing along at home, will they dismiss the case against the firm? I mean, c'mon, who sues an entire FIRM. That's just rude.
And then, if you really want to play guessing games, you can ask yourself if this is going to result in anything good or bad for Partner A or Partner B.
Inquiring minds want to know.
(Don't worry, we'll soon get back to knitting, eating, spending money like a drunken sailor and general revelry.)
For my 4 readers who might not know what the firm does, here's the common woman's background synopsis of a securities class action case (and this is just my simplified way of doing it and bears no resemblance to the firm and how they actually do business.) :
Company X announces that they have the BEST do-dad EVER. They are going to make a BAZILLION dollars on it. So, you read about the company, how well they're doing and this great new product so you buy stock. A few days, weeks or months later, Company X announces that they have to restate earnings or something of that effect because the gizmo isn't working and won't hit the stores until 2010 or whatever. "Oops," they say. "Our bad." Ok, that sucked, you just lost your money 'cause these clowns made promises they didn't keep.
On top of this, there's a little thing called a Form 4 that insiders in a company have to file when they sell stock in their company. So, if the insiders sell stock AFTER the FABULOUS announcement and before the gee-we-suck announcement, that's available for all of us to see.
Company X can now be sued for lying to shareholders to drive up the price of the stocks so the insiders can make money and then harming the stockholders.
Bad Company X. BAD, BAD Company X.
That's how I like to explain securities class actions. I'm not saying its right or wrong. I'm not saying that these companies do it on purpose or by accident in the normal course of business. I'm not here making any judgements. (I'd never do that in writing.)
The reason I say all this...
This investigation has been going on since Bush II took office. For it to finally result in a plea, holy wow. (And, BTW, for the four reading this who really don't care, I can only imagine the hundreds of millions that have been spent over the years to result in one plea of one attorney.)
ONE PLEA. This didn't stop the securities class action business. If you look at the numbers of cases filed by Milberg or Lerach, I'm sure that they've dropped. But, I'm sure if you looked at the number of cases filed in general, that hasn't fallen much. Now, instead of the 800lb gorilla, or even the two 400lb gorillas (after Milberg split), you're looking at armies of wee gorillas. (I'm sure the attorneys with their smaller firms are loving being called wee gorillas, but I digress.) All I'm saying is that the attorneys are still out there, as are the class actions. Sorry current administration, you didn't conquer the class action nation, which is what I think they were trying to do.
So, Jenna, what did all that money and investigation really accomplish?
A damn fine question and one I hope much more knowledgeable writers on this subject cover.
The next question, for the kids playing along at home, will they dismiss the case against the firm? I mean, c'mon, who sues an entire FIRM. That's just rude.
And then, if you really want to play guessing games, you can ask yourself if this is going to result in anything good or bad for Partner A or Partner B.
Inquiring minds want to know.
(Don't worry, we'll soon get back to knitting, eating, spending money like a drunken sailor and general revelry.)
Labels: random ramblings
posted by jenna! at
11:39 AM
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