May 18, 1999
Judge Denies Class-Action Status
For E*Trade Investor Lawsuit
By a WALL STREET JOURNAL Staff Reporter
PALO ALTO, Calif. -- Online broker E*Trade Group Inc., whose
recent computer glitches have spawned several investor lawsuits,
received some good news on the litigation front.
A California judge denied a request from five E*Trade investors to
certify their suit, originally filed in November 1997, as a class
action. Class-action certification could have allowed more investors
to sue for damages. Judge Robert Baines, of Santa Clara County
Superior Court, denied the petition after a two-hour oral
argument May 7.
Seth R. Lesser, one of the lawyers for the investors, called the
ruling "a disappointment," but he said it "doesn't affect any of the
claims in this case." The suit alleges that E*Trade's service
problems delayed investors' trade executions, and that E*Trade's
advertising, which promised investors fast and efficient trading
online, was deceptive. E*Trade officials couldn't be reached for
comment.
E*Trade's quarterly report, filed with the Securities and Exchange
Commission Monday, lists seven other pending investor lawsuits,
including three relating to the three-day computer meltdown
E*Trade faced in early February. All seek class-action status. Two
of the cases have been consolidated in Santa Clara County court,
the report said, and one involves a complaint over E*Trade's
distribution of initial public offerings.
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