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Moneyweb discovers that it can''t put GATA down
JPMorgan Chase Agrees to Settle Lawsuits
By Eileen Alt Powell
Associated Press
Thursday, April 20, 2006
http://biz.yahoo.com/ap/060420/jpmorgan_chase_settlement.html?.v=2
NEW YORK -- JPMorgan Chase & Co., the nation's third-largest bank,
has agreed in principle to pay $425 million to settle lawsuits
accusing the institution -- and dozens of other Wall Street
underwriters -- of manipulating the market for initial public
offerings of stock.
Melvyn I. Weiss, partner in the New York-based law firm Milberg,
Weiss, Bershad & Schulman LLP, told The Associated Press that
a "memo of understanding" had been signed on Wednesday in the case,
which is pending in U.S. District Court in Manhattan.
Weiss said he believed it would take at least 60 days to formalize
the agreement, which will have to be approved by the court.
JPMorgan Chase spokesman Joseph Evangelisti confirmed that an
agreement in principle had been reached, but could provide no other
details. He said the settlement "would have no adverse effect on
financial results."
The civil suits against JPMorgan Chase are among more than 300
brought by Milberg, Weiss alleging that companies that went public
and the underwriters who helped them do it manipulated the market.
The suits allege that JPMorgan Chase and 54 other underwriters
induced customers who received allocations of IPOs to place orders
for additional shares in the aftermarket, artificially inflating the
share prices. They also allege that the compensation received by the
underwriters was concealed.
Among the other underwriters named in the lawsuits are Banc of
America Securities, The Bear Stearns Companies, Credit Suisse,
Deutsche Bank Securities, The Goldman Sachs Group and Morgan Stanley.
The IPOs were marketed between 1998 and 2000, according to Milberg,
Weiss. Many were tech-industry companies such as Akamai, Ask Jeeves,
McAfee.com, Red Hat and WebMD -- some of which imploded in the tech
stock bust that followed.
In a related case, JPMorgan Chase in October 2003 agreed to pay a
$25 million civil penalty to the Securities and Exchange Commission
to settle a civil injunctive action relating to the firm's
allocation of stock to institutional customers in IPOs underwritten
in 1999 and 2000.
A similar settlement with the SEC was reached in January 2005 by
Morgan Stanley & Co. and Goldman Sachs, each of which agreed to pay
a $40 million civil penalty to settle the IPO allegations.
Weiss said that JPMorgan was the first of the underwriters to reach
a preliminary agreement aimed at resolving the civil cases.
He termed it a "breakthrough" but said it was too early to predict
whether it would encourage others to settle, adding: "This was a one-
off settlement, not part of a global discussion."
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