Lawyer May Sue Nasdaq for $600 K Loss
A Miami-area lawyer who lost a $600,000 investment in WorldCom stock may pursue his suit against Nasdaq Stock Market Inc. because of an en banc ruling of a federal appeals court.
The full 11th U.S. Circuit Court of Appeals ruled last week that Nasdaq did not have immunity for ads touting the stock, according to the Fulton County Daily Report.
“These advertisements—by their tone and content—were in the service of NASDAQ’s own business, not the government’s, and such distinctly non-governmental conduct is not protected by absolute immunity,” Judge Rosemary Barkett wrote in her opinion for the en banc majority.
Steven Weissman had claimed in his suit that Nasdaq lost its immunity when it was converted in 2000 from a traditional stock exchange to a for-profit enterprise.
He contends NASDAQ promoted WorldCom as a good investment when it was aware the company had failed to meet Nasdaq’s listing standards. He also alleges that Nasdaq failed to disclose its potential financial interest in touting the stock, since high trading volumes bring it more revenue.
“I think the big story is that without an act of Congress, the SEC eliminated the primary investor protections that have been in place since the 1930s,” Weissman told the ABA Journal after the initial panel decision. (See “Stock Tip: Check Status of Exchange” in the May 2007 issue.)