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It is a truism of the securities class action business that the other guy’s cloud is your silver lining. Witness the latest craze in securities class action filings: the IPO allocation suit. Leave it to plaintiffs’ lawyers to figure out how to make all those crashed new-economy IPOs pay off. Back in December, The Wall Street Journal began a series of reports about the peculiar, and possibly improper, methods that underwriters used to distribute shares in hot, high-tech initial public offerings in the last few years. Milberg Weiss and its plaintiffs’ bar brethren smelled opportunity. Maybe the new-economy companies whose IPOs were at issue were struggling to get by, but those underwriters, including Credit Suisse First Boston Corporation; Goldman, Sachs & Co.; Merrill Lynch & Co.; and Robertson Stevens, still have plenty of money. Within months of the first Journal stories more than 100 securities class actions had been filed in the Southern District of New York, accusing such new-economy notables as VA Linux Systems Inc.; Red Hat Inc.; Corvis Corporation; and Razorfish Inc. — and their underwriters — of rigging the markets in their IPOs. Only the Linux suit, with Milberg Weiss as lead counsel, has progressed beyond the organizing stage, so it’s impossible to know if these cases will prove to be the bonanza plaintiffs’ lawyers are hoping for. Lawyers for the issuers, for instance, have been saying that their clients had no idea whether underwriters were demanding kickbacks and manipulating the aftermarket in their shares, and so have no liability. Underwriters will likely challenge the standing of individual investors who try to serve as plaintiffs in the class actions. “I think these cases are total garbage,” says securities class action defense lawyer Boris Feldman of Palo Alto, Calif.’s Wilson Sonsini Goodrich & Rosati. “They’re not going to result in big payouts. They’re not a big deal.”

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