William Lerach, a lawyer many in corporate America consider public enemy No. 1, says the U.S. Supreme Court could have been tougher on disgruntled investors in a much-watched securities case.
Lerach has made a fortune suing corporations for alleged securities violations. His firm represents the lead plaintiff in shareholder suits against Denver- based Qwest in connection with losses attributed to accounting regularities.
The court ruled this week that to bring a lawsuit, investors must show a company’s alleged lies are directly to blame for their losses.
“It may seem funny to lose a case 9-0 and think it is a good result …. but we were delighted by the opinion,’ Lerach told The Denver Post.
Lerach said lawyers for the other side argued for an even tougher standard.
Under that standard, investors could collect only the losses incurred after a company restated earnings, not larger losses linked to an earlier disclosure about a business problem that led to the restatement, Lerach said.
But Richard Bernstein, an attorney who represented the securities industry in the case, called the decision a win for his side and accused Lerach of spinning the outcome. “I don’t think there was a tougher standard, or an easier standard,’ he said. “I just think he is 100 percent wrong.’
The decision, overturning a 2003 ruling by the U.S. Ninth Circuit Court, came in a case brought by investors against Dura Pharmaceuticals.
Lerach’s firm represented the plaintiffs, and partner Patrick Coughlin argued its position to the Supreme Court.
The justices’ decision assures that plaintiffs can’t use a stock decline that is the result of a bad business decision to win their case. The Supreme Court decision applies to all pending cases, including the securities suits against Qwest.
Staff writer Tom McGhee can be reached at 303-820-1671 or tmcghee@denverpost.com.
Lerach in Colorado
Class-action lawyer William Lerach is so successful some consider him a corporate scourge. Some Colorado cases he has been involved in:
Verado Holdings/FirstWorld Communications: In January, a judge approved a $25.9 million settlement between the defunct Denver- based data-center operator and investors, represented by Lerach, after a nearly five-year battle.
Boston Chicken: A July 1997 class-action suit alleged the concealment of loan losses that eventually led to the stock decline and bankruptcy of the Golden-based chain. The company settled for $19.4 million, paid by Boston Chicken’s underwriters and Big Five accountants. Lerach represented the lead plaintiff.
Qwest: At least nine shareholder class-action suits against the telecom were consolidated, handled by Lerach’s firm. First filed in 2001, the suits allege securities fraud and poor stewardship of employee savings plans, among other things.
STAFF WRITER JOHN WENZEL
