The actions contend that bankers agreed to buy stock at an agreed price following flotation to help inflate the share price in the short term and that they accepted bribes.
The lawsuits have now been filed against ten banks including Credit Suisse First Boston, Merril Lynch, Morgan Stanley Dean Witter, Bear Stearns and Salomon Smith Barney. Experts estimate up to sixty more class action lawsuits are currently being prepared. The US Justice Department and the Securities and Exchange Commission are also investigating the banks’ behaviour during the flotations.
If the actions are successful they would open the door to actions from other investors, who have seen share prices subsequently crash, to claim damages.
Robert Baker, managing director of communications for Credit Suisse First Boston told The Times, “we believe the lawsuits are without merit and we intend to defend them vigorously”.