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.

From Bloomberg News