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As if the lawsuits against investment banks over IPO allocations weren’t big and complex enough, plaintiffs lawyers now want to vastly expand their scope. They also want to get their hands on documents detailing research analysts’ part in the IPO allocations. In March, class action attorneys representing individual investors told a federal judge that they will seek access to internal documents relating to as many as 900 tech IPOs. That number includes nearly every technology IPO that occurred during the tech boom. Only about 300 IPOs are now included in the suits. The move sets the stage for a lengthy court battle. The plaintiffs insist they will not accept a global settlement, and the defendants � 55 underwriters and more than 300 issuers � have vowed to fight the expanded discovery request. As part of the discovery phase of the lawsuits, the plaintiffs, led by New York’s Milberg Weiss Bershad Hynes & Lerach, will have access to all documents underwriters have already submitted to regulators regarding investigations of how investment banks allocated IPOs. Now plaintiffs lawyers plan to push for more: Not only do they want the regulatory submissions for IPO allocation issues, they said, but they are also seeking to include all the documents underwriters have submitted to regulators regarding research analysts’ alleged conflicts of interest. For the 300-plus IPOs actually involved in the lawsuits, underwriters have agreed to hand over any documents they have already submitted to regulators. Judge Shira Scheindlin, presiding over the suits in the Southern District of New York, directed both the plaintiffs and the underwriters to submit letters and briefs on the issue. Calling the dispute the first major legal point of the lawsuits, Scheindlin said she will look to make a ruling on the subject. There’s no simple solution in the offing. Plaintiffs lawyer Mel Weiss, a name partner at Milberg Weiss, said that Wall Street underwriters could not join forces if they are looking to settle the cases � that, in effect, he would not accept a global settlement from the defendants. “They can’t come to us with a single dollar amount,” Weiss said in the court conference. Sullivan & Cromwell partner Vince DiBlasi, who is representing the Goldman Sachs Group, Inc., said the underwriters have not yet made any movement toward settlement talks. Weiss and DiBlasi had a spirited exchange over which documents will be included in the discovery phase. “Introducing discovery issues in 900 IPOs makes absolutely no sense, and we’re going to oppose that any way we can,” DiBlasi, speaking for all the underwriters, told Weiss. “If you can prove it in 300 cases, that should be enough.” Weiss said he was looking to prove an overarching scheme by underwriters to manipulate IPO shares. “If Mr. [Jack] Grubman [of Salomon Smith Barney] or Mr. [Frank] Quattrone [of Credit Suisse First Boston] wrote a memo that says, ‘We have a scheme to manipulate stock prices,’ I want that document, and I don’t want to be told it’s not included in the cases,” said Weiss.
A version of this story originally appeared in The Daily Deal.

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