USB suit dismissed.

31 03 2009

The New York Times is reporting (a day after it was reported by Bloomberg), that the shareholders suit against USB has been dismissed.  The judge ruled that the suit was dismissed on the grounds that it was precluded by a settlement with the Securities Exchange Commission.

The judge, Lawrence M. McKenna of United States District Court in Manhattan, ruled that the investors were not entitled to continue their litigation because UBS had reached a $19.4 billion settlement in the matter in August with the Securities and Exchange Commission and regulators in several states. The bank agreed to buy back nearly that amount of securities as well as pay a fine.

The significance of the dismissal, aside from the large visibility from this case, is that many similar lawsuits will likely be dismissed on the similar grounds. The end result being less involvement by civil courts involved in shareholder suits, greater reliance on administrative courts and government agencies, and greater judicial economy. The losers, however, will be the shareholder and the derivative lawsuit as a means of addressing grievances.

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