Silicon Valley firms are expected to feature highly on a new Web site set up by Stanford Law School to make it easier for investors in companies to file securities fraud suits.
Stanford?s Securities Class Action Clearinghouse was launched this week with initial funding from San Francisco investment firm Kohlberg Kravis Roberts and the backing of the Northern California District Court and the US Securities and Exchange Commission (SEC).
The court and the SEC both want to see all legal documents in a class action suit filed on the Internet, in order to give other investors access to more information and a chance to take their own actions accordingly.
The Northern District Court?s remit includes Silicon Valley, whose hi-tech companies are traditionally the prime targets of fraud litigation from investors because of their volatile earnings and stock prices. The Northern District, which deals with more securities claims than any other form of lawsuit, is expected to enforce the Internet filing rule following a period of public consultation.
In October, computer firms throughout the Valley united against Proposition 211, a piece of proposed legislation that would have made it easier to file securities fraud actions against companies. The Proposition was overwhelmingly defeated by the California electorate, which saw it as a licence for East Coast lawyers to make easy money filing frivolous lawsuits.
Stanford law professor Joseph Grundfest said the new site was there for information, not ideological purposes, and added that he had been opposed to Proposition 211. But one of the Proposition's greatest advocates, Pepperdine Law School professor Benjamin Stein, said the site would refute claims that class actions were trumped-up charges.
Users of the Stanford site scroll through an index to check which companies are involved in suits, before drilling down for details of allegations and the responses to them. The contact details for attorneys representing all parties will be attached to the site.
The Stanford Web site will cost a six-figure sum to maintain annually, a sum that will be paid for mainly by grants from the New York-based National Center for Automated Information Research. The Web site can be found at http://securities.stanford.edu.
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