News digest for July 27, 2006

Investors’ Class-Action Lawsuits Drop Sharply
The number of new federal class-action lawsuits filed by disgruntled investors has dropped dramatically and is now at its lowest level since 1996, according to a new Stanford University study.

Fairfax Sues Investors for $5 Billion Citing Stock Manipulation
The alleged scheme, which dates back to December 2002 after Fairfax shares were listed on the New York Stock Exchange, involves a “massive and fraudulent disinformation campaign” targeting the company and other publicly traded companies, including negative stock analyst reports and the accumulation of short positions in the companies’ stock, which Fairfax says drove share prices down.

The market for “blank check” IPOs is getting spooky.
Critics say the Wall Street firms are warming up to the blank-check market at just the wrong time and that many of the deals they are peddling could prove to be lemons.

Lou Thomson joins Havey Pitt’s Kalorama Partners
Louis M. Thompson, Jr., retiring chief executive officer of the National Investor Relations Institute, will join Kalorama Partners in Washington, D. C. as a managing director effective September 7, the firm announced today. He will also join Genesis Inc., a Denver-based consultancy at the same time.

Are Backdating Cases Really Securities Fraud?
If Reyes had backdated the options to increase his compensation, then it might be an easier case of securities fraud, although managerial gluttony is not a criminal offense, at least not yet. While the concept of fraud is certainly flexible, as witnessed by the variety of cases in which the government has prosecuted it successfully, “securities fraud” still requires prosecutors to prove that the defendants used a “manipulative or deceptive device or contrivance” to defraud a victim. Lies alone will not turn misconduct into fraud.

Japanese newspaper advertising staffer held for illicit trades
Sasahara is suspected of profiting from stock trades using information he obtained on planned stock splits by five listed companies before legal notices on the splits were published in the paper, the sources said.

Broadband Subscriptions Soar 33%
Bby the end of last year, there were 50.2 million U.S. homes and businesses connecting online via broadband–marking a 33 percent increase from 2004, according to a report released Wednesday by the Federal Communications Commission.

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