P.E. Heavies Hit With Collusion Class-Action

Nov 15 2006 | 2:36pm ET

The Justice Department’s probe into alleged collusion among private equity firms hasn’t uncovered any wrongdoing yet, but that hasn’t stopped the lawyers.

New York law firm Wolf Haldenstein Adler Freeman & Herz filed a lawsuit against 13 private equity firms, alleging a conspiracy to fix stock prices of public companies they were taking private. The suit claims the firms—including Kohlberg Kravis Roberts, The Carlyle Group and Texas Pacific Group—colluded such that the plaintiffs “were paid less for their equity shares that they sold to the private equity defendants than they would have been paid under conditions of free and open competition.”

The suit, filed in Manhattan federal court, seeks class-action status and cites 43 private equity deals involving then-public companies, creating a potentially enormous class. Among them are the $33 billion deal for hospital operator HCA and the $12.3 billion sale of Spanish-language broadcaster Univision. Violation of federal securities law entitles successful plaintiffs to triple damages.

Other defendants include Apollo Management, Bain Capital, The Blackstone Group, Clayton, Dubilier & Rice, Madison Dearborn Partners, Merrill Lynch, Providence Equity Partners, Silver Lake Partners, Thomas H. Lee Partner and Warburg Pincus.

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