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Wall Street bailout: Now, the lawsuits!

September 23, 2008

Text: Michael Orey, BusinessWeek.com

Consider the developments of the past 10 days: collapsing share prices, huge investor losses, allegations of financial obfuscation and mismanagement. It would seem a likely setup for a new wave of litigation and a boon for the plaintiffs' bar.

The reality, however, is far more muted. Legal rulings have made it significantly harder to press shareholder claims. And since the victims of the current financial carnage include some of the primary defendants themselves, investors may find themselves reaching into empty pockets for redress.

Image: US Senate Banking Committee chairman Christopher Dodd (D-CT) (center) hosts a meeting with (L-R) Sen. Chuck Hagel (R-NE), Sen. Robert Bennett (R-UT), Sen. Mel Martinez (R-FL), Sen. Bob Corker (R-TN) and Sen. Charles Schummer (D-NY) in his offices on Capitol Hill September 22 in Washington, DC to hash out the details of the a $700 billion bail out for Wall Street, the biggest government bailout in history. | Photograph: Alex Wong/Getty Images

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