The mortgage crisis has given birth to a big year for securities suits. But will many of them be doomed by strong defense arguments?
According to one report, which will be issued tomorrow by Stanford Law School and Cornerstone Research, 2008 saw a total of 210 prospective securities class actions filed last year, a 19% increase over the previous year and more than 80% above the 2006 total. Many of those suits allege that financial firms overvalued their mortgage-related assets; others complain about the business practices of companies that issued subprime loans.

Problems are mounting for the Reserve Fund company, whose founder invented the money market fund in the early 1970s.

Today the SEC filed a complaint alleging a massive insider-trading scheme that implicates, among others, a former Lehman Brothers employee; his wife, who’s a partner in Brunswick, a firm that does public relations for M&A deals; and Eric Holzer, who the complaint describes as “a tax associate in the New York City office of an international law firm.”

In recent years, Wall Street banks doing business in Asia have staffed up their private wealth operations there to serve the continent’s newly-rich in countries like Indonesia. Today, the Journal reports on the legal fallout from this trend.

The Martin Act, it seems, is getting a nice workout, thanks to NY AG Andrew Cuomo.
The 1921 New York law, according to the WSJ, spells out a broad definition of securities fraud and can be used to pursue civil and criminal penalties. Some say the Act has provided the New York AG’s office with more authority to pursue securities-fraud in an era when federal regulation has come under fire for having a case of the slows.

With terms like “credit crunch,” “subprime crisis” and “CDS” providing the vocabulary of the current crisis, the term “IPO suit” seems almost retro. After all, the Internet boom is nearly a decade gone. Yet, one of the era’s prominent lawsuits has been sputtering along now for seven years. And a settlement, finally, may be in sight.

Lehman Brothers employees signed in green a portrait of Lehman Brothers CEO Richard Fuld, Jr.,outside the New York headquarters, Sept. 15, 2008 in New York. (AP Photo/Mary Altaffer)

Not long ago we told you the auction-rate securities party might be drawing to a close for big financial institutions that were cashing out. We may have spoken too soon.

As the summer of vindication winds down (well, at least the summer part), three more so-called specialist traders might get to enjoy the final days. Last month, the Second Circuit upheld the acquittal of David Finnerty, a former specialist trader at Fleet Specialist, who’d been accused of making improper trades for his firm’s account at [...]

As the auction-rate securities party continues to wind down, and many of Wall Street’s biggest players have already come and gone, some smaller fish are sizing up their prospects for an invite. As we’ve noted, in recent weeks UBS, Citi, J.P. Morgan Chase, Morgan Stanley, Merrill Lynch and Wachovia have agreed to buy back more [...]