(CN) – A federal judge in Manhattan refused to withdraw her approval of a $586 million settlement of securities fraud class actions over technology companies that went public in the late 1990s. U.S. District Judge Shira Scheindlin said the settlement was still reasonable and fair, despite class counsel’s claim that the amount was “deficient” compared to the results of a mock trial.
A magistrate judge had barred attorney Theodore Bechtold from admitting those results into evidence.
“While mock trials can be instructive in assessing the strengths and weaknesses of a case, they are, by no means, entitled to a presumption of correctness,” Judge Scheindlin wrote.
“The settlement amount was held to be reasonable in light of the expected recovery and attendant risks … and the alleged mock trial results do not change that conclusion,” she added.
The settlement put to rest 309 class actions accusing underwriters, including many of Wall Street’s biggest firms, of forcing investors to pay inflated prices for stock in technology companies that went public in the late 1990s. Investors said they lost billions when those companies tanked.
The banks were also accused of preparing inaccurate analyst reports and recommendations, making the tech companies sound like more attractive investments than they were.
Defendants included Credit Suisse Group, Morgan Stanley Merrill Lynch, Bank of America, JPMorgan Chase, Goldman Sachs and Citigroup.