Plaintiffs in one of the biggest US investor lawsuits stemming from the financial crisis got a boost from a judge, who said a case against fallen investment bank Bear Stearns and its outside auditor, Deloitte & Touche, can go forward.
The decision means that one-time Bear Stearns investors can move ahead with a proposed securities class-action fraud case, though the judge threw out two related lawsuits that had been rolled into the litigation. The investors accuse former Bear chiefs of painting a wildly misleading picture of the firm's finances ahead of its March 2008 unravelling.
Among the defendants is former Bear chief risk officer Michael Alix, who joined the Federal Reserve Bank of New York in November 2008 as a top bank regulation adviser. Alix's lawyer was not immediately available to comment.
Representatives from J. P Morgan Chase & Co, which bought Bear Stearns at a bargain price at the start of the credit crisis were also not immediately available for comment.
"It is important to recognise that in ruling on the defendants' motions to dismiss, the court was required to assume that the allegations in the plaintiffs' complaint were true. At this stage of the case the court was not permitted to and did not consider whether those allegations actually are true or whether the plaintiffs have evidence to support their allegations," a Deloitte spokesperson said in a statement.
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