A federal judge yesterday dismissed six class-action lawsuits filed this month against investment banking firm Morgan Stanley and its top Internet analyst, Mary Meeker, charging the analyst with a conflict of interest.
The lawsuits, filed Aug. 1 by shareholders of Amazon.com, eBay and AOL Time Warner, alleged that Meeker issued research reports from July 1998 to May 2001 containing “materially false and misleading statements” that were designed to encourage investors to buy securities of Amazon, eBay and AOL. The analyst’s ratings and recommendations were not based on objective analysis, the suits alleged, but on the “defendants’ desire to attract and retain” Amazon’s, eBay’s and AOL’s investment banking business.
The lawsuits alleged that Meeker had conflicts of interest because her compensation was tied to the amount of business Morgan Stanley received from Amazon, eBay and AOL.
Morgan Stanley would not comment on the judge’s decision.
Amazon, eBay and AOL Time Warner were not involved in the lawsuits, which were filed by law firms specializing in class-action suits.
In dismissing the lawsuits, U.S. District Judge Milton Pollack characterized them as “filled with market gossip.” He also said the lawsuits were in bad taste.
“A complaint is not a vehicle in which to air and put in issue the views of newspapers, magazines and social engineers and their conclusions,” Pollack wrote. “A collection of market gossip pervades the endless stream of news organization tidbits which are spread throughout [the complaint].”
The lawsuits based the majority of their charges on Wall Street Journal news stories that chronicled the Security and Exchange Commission’s efforts to ascertain whether equity analysts have conflicts of interest when touting the stocks of companies that also are clients of their employers’ investment banking divisions.
Pollack said the investors could refile their suits if they were rewritten to contain “proper allegations.”