Case Details

Year Initiated/Committed


Year Resolved


Settlement Amount

$1.027 billion


U.S. District Court for the Southern District of New York

Docket Number

94 CIV 3996; M.D.L. No. 1023

Lead State


Participating States



A.G. Edwards & Sons, Inc.; Bear, Stearns & Co., Inc.; BT Alex, Brown, Inc.; CIBC Oppenheimer Corp.; Cowen & Company; Credit Suisse First Boston Corp.; Dean Witter Reynolds, Inc.; Donaldson, Lufkin & Jenrett Securities Corp.; Everen Securities, Inc.; Furman Selz LLC; Goldman Sachs & Co.; Hambrecht & Quist LLC; J.C. Bradford & Co., LLC; J.P. Morgan Securities, Inc.; Legg Mason Wood Walker, Inc.; Lehman Brothers Inc.; Mayer & Schweitzer, Inc.; Merrill Lynch, Pierce, Fenner & Smith, Inc.; Morgan Stanley & Co., Inc.; Nash, Weiss & Co.; Olde Discount Corporation; Painwebber Inc.; Piper Jaffray Inc.; Prudential Securities, Inc.; The Robinson-Humphrey Company, Inc.; Salomon Brothers, Inc.; Smith Barney Inc.; Spear, Leeds & Kellogg, LP (Troster Singer); UBS Securities LLC; Weeden & Co., L.P.; Sherwood Securities Corp

Case Description

Although suit was never filed, the Plaintiff States informally participated in a federal private class action seeking treble damages, reimbursement of costs, attorneys fees and injunctive relief, alleging that the defendant financial investment companies conspired to increase and fix the ‘spreads’ paid for sales of class securities. The Plaintiff States focus was to ensure that individual investors and public pension funds were fairly represented in the litigation and settlement. The Plaintiff States alleged that Defendants increased spreads for the securities by avoiding odd-eighth bids and asking quotations for the securities, following the spread set by a leading market-maker in a security, and exerting pressure to prevent market-makers from introducing bid and ask quotations that would reduce the spread for a security. As a result, the Plaintiff States alleged that customers paid excessive transaction costs for the securities. In order to resolve the dispute without further litigation, the Plaintiff States worked with the private class action counsel and entered a settlement agreement in which the Defendant financial investment companies agreed to a permanent injunction and agreed to pay $1,027,000,000.