NEW YORK, March 29, 2004 (PRIMEZONE) -- In an important victory for investors, Manhattan Federal Judge Jed S. Rakoff today issued a memorandum order allowing RealNetworks stock buyers -- represented by lead class counsel Marc I. Gross of Pomerantz Haudek Block Grossman & Gross LLP of New York City -- to proceed with class action lawsuits alleging that the stock buyers were injured by fraudulent analyst reports issued by former Lehman Brothers stock analyst Michael Stanek.
As Judge Rakoff's memorandum indicates, the heart of the stock buyers' claim in these class action lawsuits is that the Lehman Brothers analyst reports authored by Stanek were fraudulent because the reports falsely stated that Stanek believed that investors should buy RealNetworks stock, even though Stanek's private e-mails to important Lehman Brothers clients (and other materials) show that Stanek actually believed that investors should not buy RealNetworks stock.
In a nutshell, as Judge Rakoff's opinion explains:
. . . the false statement in . . . (Stanek's) reports is "Based on my investigation of the company and the application of my expertise, I honestly believe you should buy" when the truth is "Based on my investigation of the company and the application of my expertise, I honestly believe you should sell."
As Judge Rakoff further explains in his opinion:
. . . the stark difference between what Stanek was effectively recommending to readers of his reports, i.e., "buy," and what he was effectively recommending to preferred customers in his emails, i.e. "sell," supports a reasonable inference of an intent to mislead and defraud the former.
The opinion goes on to note that:
As RealNetworks' sometime investment banker, Lehman had an interest in promoting its (RealNetworks') stock to the general public, but not at the expense of its (Lehman's) most favored customers, i.e., the institutional investors with whom Stanek corresponded by email.
Judge Rakoff's opinion rejects all of Lehman's attacks on the RealNetworks stock buyers' claims, including Lehman's argument -- which has been raised in many of the other so-called analyst cases -- that the stock buyers' claims should be dismissed because "the market as a whole was aware of the alleged conflicts between Lehman's investment banking and research departments since there was extensive media coverage of such conflicts." The opinion notes that these arguments:
. . . fail because Lehman has not established that the market knew Stanek was lying when he recommended RealNetworks' stock. Simply establishing the media had reported on some generalized conflicts between investment banking and research departments in a variety of investment banks is not equivalent to market awareness of Stanek's misrepresentations.
Judge Rakoff's opinion concluded by denying "in its entirety" defendant Lehman Brothers' motion to dismiss the RealNetworks stock buyers' claims against Lehman Brothers.
Lead Counsel for the Plaintiff Class is Marc I. Gross, Esq. of Pomerantz Haudek Block Grossman & Gross, LLP, (212) 661-1100, ext. 239.
Counsel for defendant Lehman Brothers Inc. are Moses Silverman, Esq. and H. Christopher Boehning, Esq. of Paul, Weiss, Rifkind, Wharton & Garrison LLP, (212) 373-3000.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca