Thank you for sharing!

Your article was successfully shared with the contacts you provided.
CLASS ACTION AGAINST ANALYSTS CAN CONTINUE NEW YORK — A federal judge last week said he would allow a class action against former analysts at Robertson Stephens over their recommendations for the technology stock Corvis Corp. Southern District of New York Judge Gerard Lynch said the suit, which alleges that the analysts recommended the stock to inflate its price and then sold off their own shares in the company, was distinguishable from a similar suit against Merrill Lynch that was dismissed last summer by Southern District of New York Judge Milton Pollack. Lynch said that in the case of Corvis stock, analysts at Robertson Stephens could be sued for securities fraud because they deliberately shielded their true opinions of the stock from the public for personal gain. The investment bank has since been subsumed by other financial companies. “When defendants chose to speak about Corvis, they hid their true opinion, which could have depressed the price, and lied with the intent to increase the demand for Corvis stock for their own gain,” Lynch wrote in DeMarco v. Robertson Stephens Inc., 03 Civ. 590. “The impact of defendants’ false opinions on share price is a question of fact for a jury to decide.” Judge Lynch rejected the argument that there was not a sufficient connection between the analysts’ actions and the eventual fall of Corvis stock. A 2001 New York Times article reported that Robertson Stephens analysts were privately selling their shares of Corvis while advising the public to purchase the stock. “On the facts in this case, the court must conclude that plaintiffs have adequately alleged loss causation because the decline in stock price was a foreseeable consequence of defendants’ fraudulent statements that allegedly inflated the price, because in an efficient market, revelation of the misrepresentations will lead inexorably to a price correction,” Lynch wrote. — The New York Law Journal

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.