As stated previously in The 10b-5 Daily, securities class actions against mutual funds are the new new thing. The New York Times (free subscrip. required) agrees in this article from Wednesday's edition, noting that nearly a dozen plaintiff firms have brought suits against companies that manage mutual funds in the three weeks since Eliot Spitzer, the attorney general of New York, announced his investigation into unfair trading practices. The article speculates that plaintiffs may be able to bring actions under the Investment Company Act and Investment Advisors Act, thus avoiding the heightened pleading requirements of the PSLRA.
Quote of note: "The lawsuits challenge the practices identified by Mr. Spitzer and federal regulators. Those practices include allowing favored investors to trade after hours and to buy and sell mutual fund shares over short periods to turn a quick profit, a practice known as timing. In the eyes of plaintiffs' lawyers, the potential settlements could dwarf the biggest paid by corporate defendants (and their insurers) in shareholder lawsuits to date."Posted by Lyle Roberts at September 26, 2003 11:58 AM | TrackBack