Tighter Lending Standards Make Credit-Piggybacking Services More Popular

Yet Another Lawsuit Against Dot Com IPO Banks Shot Down

from the try,-try-again dept

Mon, Jun 18th 2007 11:31pm — Mike Masnick

Ever since the dot com bubble burst, there have been investors looking for any kind of lawsuit to reclaim some of the money they lost speculating on the likes of Pets.com and TheGlobe.com. Of course, what they don't want to admit is that any kind of stock investment is a risky proposition. They ignored all that during the hype, because there was so much money flowing and everything only seemed to go up. The latest in a long line of lawsuits has now been shot down by the Supreme Court. This lawsuit was about whether the big Wall Street banks that took companies public in those days violated anti-trust rules by requiring investors live up to certain promises in order to get into a hot IPO. The conditions included promises to buy more shares later at a higher price to keep the upward spiral going, paying "unusually" high commissions and agreeing to buy less desirable stock as well. Of course, the investors who agreed to these conditions knew what they were doing -- but they made the calculation that the booming dot com mania would outweigh the risks. It turns out they were wrong -- but that's part of the risk that you take when investing (especially in highly speculative dot coms who have only been around for a few months and show no track record). This just seems like sour grapes for investors who bought into the hype and learned an expensive lesson about how the stock market works.

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8 Comments

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Overcast, 19 Jun 2007 @ 6:16am

Just have to love people who - because of their own failures in life, try to stick a knife in the back of someone who was/is successful.

Socialism at it's best.
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- Casper, 19 Jun 2007 @ 7:06am
  
  Re:
  Hey now, life was fair until someone else stole my chance and convinced me to throw my money away. I only think it's fair that everyone who succeeded should pay for my failure. This is of course a joke.
  
  Seriously though, I hear this kind of idiocy every day. People tell me that because they don't make as much money as I do, don't want to work as hard as I have, and can't manage their own lives, that I should be paying for them to help get by in life. Why would I want to perpetuate a life style that has already FAILED! If you suck at life, do so quietly. If you throw away your money on poor investments, cut your losses and walk away. If you smoke away your education, don't expect the rest of us to pay for your stupidity.
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- Jim, 19 Jun 2007 @ 8:30am
  
  Re:
  It was always my understanding that trying to acquire more resources for yourself was Capitalism at its finest. Sometimes you see a better sprocket sometimes you sue a company for breaking a law or agreement.
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NLG, 19 Jun 2007 @ 9:28am

You should probably actually read a SCOTUS opinion before you comment on it. All the Court did here was to hold that there was no reason for antitrust claims in a situation like this, because the securities markets are already adequately regulated and to allow this kind of litigation would create confusion. However -- and significantly -- the Court did not hold that the core claims here were meritless. In fact, just the opposite -- as the Court noted, these same defendants have paid hundreds and hundreds of millions of dollars to settle nearly identical lawsuits filed under the securities laws for the very clear violations that were at issue, including fraudulently inflating the prices of these stocks for some period after the IPOs through the requirements that IPO purchasers agree to buy more stock post-IPO at higher prices.

Capitalism my ass. Capitalism depends on efficient markets in order accurately to price any company's equity. Side deals that prop up or pump up stock prices work precisely contrary to that purpose. When companies deceive the capital markets, everybody gets hurt.
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Joe Smith, 19 Jun 2007 @ 9:42am

stupid people have rights
Just because investors were greedy and gullible does not mean they deserved to be cheated by Wall Street bankers who knew they were peddling snake oil and it does not mean that the bankers were justified in cheating them.
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Joe Smith, 19 Jun 2007 @ 9:43am

God loves stupid people ...
he must, he made so many of them.
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anonymous coward, 19 Jun 2007 @ 10:51am

i'm going to sue google for not buying my start-up! i should be a google millionaire by now! clearly, google is negligent! my business plan totally rocked!
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Biloxi, 19 Jun 2008 @ 10:14am

Toxic Wealth/Money
People, do not behave as though a ton of stupid is a crown of success. Digital debt is not money and creating schemes of how to steal the wealth of those who do not make up the gambling rules is what is tis - against the law of common sense first. But then go and study the Constitution or since that's just a goddamn piece of paper begin with a mini education in securities laws - nah that's far too complicated so just stick with simple contract law.

Dumb, dumb, dumb to act as if this has been ok - from Enron to dot com to bubble of wizard land mania. America is too stupid to remember that trading fairly in a genuine free market is what we were sold as a BRAND, but that is not what we have purchased.

Consumer protection laws really and truly do exist in the US.

But unfortunately, those who lie, cheat, steal and but of course, spread the free market capitalism - do not obey the same laws.

So you all go ahead and think that you're thinking but with brains full of ideas that have been sold to be rich by purchasing toxic wealth/money, is not only unintelligent - it is toxic stupidity.
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