Couldn’t Help But Notice (081407)
Venture capital deals are on the rise (link to report site added by me):
The MoneyTree report released Monday (August 6) from PriceWaterhouseCoopers and the National Venture Capital Association based on data from Thomson Financial also shows the number of deals for the April-May-June period was the highest nationally since the third quarter of 2001 as 977 deals raised $7.1 billion nationally. That’s a 2.5 percent increase in dollars over the second quarter of 2006 but a 6.2 percent increase in number of deals.
A look at the MoneyTree Historical Trend Data graph is enough to make one hope that the volume doesn’t pick up too much in future quarters. The hottest period for VC deals was from mid-1999 through early 2001. Given that the dot-com bubble was popping at the very same time, you have to think that most of the deals during that overheated period were either fresh duds or throwing more money at already-dying situations.
________________________________________
From Law.com — “It’s the end of an era: Securities class actions are way down, and the practice shows little sign of recovering”:
Last year, plaintiffs filings were down nearly 40 percent from the previous year, to the lowest level of securities class actions in more than a decade. The downward trend is expected to continue this year.
Why? Take your pick from among several explanations. (A) The stock market is near an all-time high, and fraud tends to be discovered when the market is down. (B) The field’s most prolific plaintiffs firm, Milberg Weiss, has been reduced to a shadow of its former self. (C) Recent appellate court rulings, including a couple at the U.S. Supreme Court, have made it tougher on plaintiffs. And no one can rule out (D), that the Sarbanes-Oxley Act and increased enforcement by the Securities and Exchange Commission and the U.S. Department of Justice have made corporate America more honest.
Occam’s Razor says (B), especially since one Milberg Weiss partner, David J. Bershad, pleaded guilty last month “to federal charges that he conspired in the payment of illegal kickbacks to individual class action plaintiffs. ….. He also agreed to forfeit $7.75 million, pay a $250,000 fine and cooperate in the government’s ongoing investigation and prosecution of other figures in the conspiracy.”
In a class action, no individual litigants are allowed standing superior to any other. Payments of kickbacks to lead plaintiffs (note: plural), as Bershad has pleaded guilty to having done, violate this principle.
Milberg Weiss and a few other firms in essence hired lead plaintiffs to invest small amounts of money in a large number of stocks. They then waited to see which ones would drop in response to earnings surprises and other bad news, and raced to the courthouse to be the first to file class actions. Most companies were guilty of nothing, but still often settled to avoid years of litigation, bad publicity, and the possibility of uninformed juries ruling against them only because of their “deep pockets.”
The government’s investigation and ultimate prosecution of Milberg Weiss began in the late 1990s, when even the trial lawyer-sympathetic Clinton Administration could no longer ignore the scale of the cynical game being played. The Bush Justice Department took it from there, eventually indicting the firm and two of its partners in May of last year. Now the trial lawyers know they’re being watched.
But hold the champagne — In 1999, in an effort to turn the tide beginning shortly after the investigation started, Milberg Weiss and its partners began funneling major campaign contributions to Democratic Party committees and Democrat lawmakers, including Hillary Clinton and Eliot Spitzer. Trouble is, the other party won the White House in 2000, and the prosecution was undeterred.
Frivolous suits will stay down as long as it’s clear that next administration’s Justice Department continues to be vigilant. Whether or not these “strike suits” return if a Democrat takes the White House is an open question. I’d rather not find out what the answer is.
____________________________________________
Time Magazine’s circulation is down 17%. Faster, please, so someone else can do a better job than this with “Person of the Year.”
____________________________________________
Bibi Netanyahu’s comeback is nearly complete — You can tell because the press is out with the antagonistic characterizations, like “media-savvy arch-hawk.”
