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An appeals court ruled late Monday that U.S. District Court Judge Shira Scheindlin does not need to recuse herself from overseeing the raft of federal court cases surrounding the alleged misallocation of shares in hot initial public offerings. A group of defendants started a movement to get Scheindlin, of the Southern District of New York, recused from the cases in late September, noting that Scheindlin and her son both had owned shares of the IPOs mentioned in the cases. The underwriter defendants in the cases include some of Wall Street’s biggest firms, including Credit Suisse First Boston, Goldman, Sachs & Co. and Merrill Lynch & Co. Morgan Stanley, in a break with the other underwriters, opposed the recusal motion. The recusal petition was submitted by Vince DiBlasi of New York’s Sullivan & Cromwell, which represents Goldman in the lawsuits and is the liaison counsel between the other underwriters and the court. In a scathing 62-page opinion in November, Scheindlin refused to recuse herself from the cases. The underwriters then took the recusal request to the 2nd U.S. Circuit Court of Appeals. The issue has been up in the air since. The plaintiffs in the cases are mostly individual investors. New York-based Milberg Weiss Bershad Hynes & Lerach is leading the lawsuits on their behalf. Mel Weiss, name partner of Milberg Weiss, said, “I’m very pleased that all the effort that the court put into this case isn’t going to go to waste and now we can progress and move forward.” Weiss noted that Scheindlin has no more constraints from moving the cases forward quickly, a wish she has expressed repeatedly in court hearings. Weiss did not bar the possibility that the underwriters might further their attempts to get Scheindlin recused. Weiss also noted that the decision from the 2nd Circuit will not affect the planned mediation between the plaintiffs and the technology companies who issued the IPO stocks in the heyday of the tech boom. That mediation process is scheduled to start today and will be overseen by federal Judge Nicholas Politan of the District of New Jersey. Copyright (c)2002 TDD, LLC. All rights reserved.

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