Global Crossing Fraud Case Can Proceed
COURTS
J.P. Morgan Chase & Co., Goldman Sachs Group Inc. and five other banks sued by shareholders of Global Crossing Ltd., owner of a worldwide fiber optic cable network, must defend themselves against a stock fraud suit, a judge ruled.
U.S. District Judge Gerard E. Lynch refused the banks’ request to dismiss all but four claims against them. Shareholders allege that the banks underwrote or issued fair-value opinions about Global Crossing while it was misrepresenting its financial condition in securities filings.
The case, which combines several suits, was brought under a federal law that holds banks responsible for an issuer’s wrongdoing if the bank could have reasonably known the company was issuing false securities filings when it underwrote stock or bonds.
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