On June 26, 2003, the Plaintiffs' Executive Committee announced that a proposed settlement between the issuer defendants and their directors and officers and the plaintiffs has been structured in the Initial Public Offering Securities Litigation, which would guarantee at least $1 billion to investors who are class members from the insurers of the issuers. (This is separate from any recoveries to be received by investors as a result of any government or regulatory action). The cases will continue against the 55 investment bank underwriter defendants.

The Court has approved this partial settlement. The Court's opinion can be viewed here.

The Initial Public Offering Securities Litigation consists of 309 class actions involving more than 300 IPOs marketed between 1998 and 2000. The actions are coordinated before U.S. District Court Judge Shira A. Scheindlin in the Southern District of New York.

The defendants consist of the companies brought public, certain of their officers and directors and 55 of the investment banks that brought them public and underwrote various follow-on offerings. The lawsuits allege that the IPOs were manipulated by the investment banks to artificially inflate the market price of those securities and to conceal the amounts of compensation actually received by the underwriters.

The plaintiffs' attorneys are led by a Court-appointed Executive Committee, which has been in a year-long mediation with the non-investment bank defendants to arrive at a settlement of all claims against them. A Memorandum of Understanding ("MOU") to settle plaintiffs' claims against the issuers and their directors and officers has now been approved as to form by counsel, and the process of obtaining approval by all parties to the MOU is now underway. The parties will be required to prepare many complex documents necessary to consummate the settlement, which will be submitted to the Court for preliminary approval. Final approval will be required by the Court following notice to class members and a fairness hearing.

The settlement provides that the class members will be guaranteed $1 billion in recoveries, to be paid by the insurers of the issuers. In addition, the settling issuer defendants will assign to the class members certain claims that they may have against the underwriters. If recoveries in excess of $1 billion are obtained by the classes from the underwriters, the settling defendants' monetary obligations to the class plaintiffs will be satisfied.

If more than $5 billion are recovered from the underwriter defendants, the settling defendants and their insurers will be able to recover various expenses incurred in connection with the litigation. The proposed settlement does not resolve the claims against the underwriter defendants. Plaintiffs will continue to prosecute those claims.