$1.4 Billion Settlement Approved For Wall Street Firms

by Glen Shapiro, LawAndTax-News.com, New York

04 November 2003

It emerged on Friday that US District Judge William Pauley has approved a $1.4 billion settlement agreement for 10 Wall Street financial services firms accused of providing investors with misleading stock research.

Agreement on the settlement amount was reached earlier this year, but Judge Pauley's approval was necessary in order for the deal to go ahead.

In his ruling, the judge revealed that the 10 banks (Citigroup, Merrill Lynch, Credit Suisse First Boston, Morgan Stanley, Goldman Sachs, JP Morgan Chase, Lehman Brothers, Bear Stearns, UBS, and US Bancorp Piper Jaffray) will be obliged to make payments to the Federal Reserve Bank of New York by November 10.

$399 million has been allocated for distribution to investors who bought stocks as a result of the recommendations made by the investment banks in question. Judge Pauley's judgement also establishes the framework for a non-profit organisation for investor education.

In a statement, SEC chairman, William Donaldson welcomed the ruling, announcing that:

"We now begin the process of implementing the settlement, which we believe is an important part of our ongoing efforts to restore investors' faith in the fairness and integrity of our markets."

Recommended