Vernon

The Case

On November. 19, 1973, Attorneys Richard P. Rich and Mitchel J. Ezer “on behalf of themselves and all other persons similarly situated,” as plaintiffs and attorneys of record for plaintiff-respondent, filed an action entitled, “Complaint Class Action for Fraud and Deceit; Money Had and Received; Usury” (superior court case No. CA-000084). Named as one of the defendants was Drexel Burnham & Co., Incorporated, formerly known as Burnham & Co., Inc., a corporation, appellant herein (hereinafter Drexel Burnham), along with 24 other corporations and 500 Does. The action sought to include as plaintiffs in the class “those persons who have purchased securities from the defendants on margin during the appropriate limitations period immediately preceding the filing of this complaint, at least 100,000 persons.” (Italics added.) The complaint alleged that the named plaintiffs Rich and Ezer were damaged in the sum of $266.82, the sum equal to the difference between the “true interest charge” (i.e., interest computed at the points or fractions over prime quoted by defendants to the members of the class) and compounded interest actually charged by defendants and alleged…