- From LexisNexis® Mealey’s™ Daily Legal News.
A federal judge in New York on Nov. 9 approved more than $ 294 million in settlements with The Bears Stearns Cos. Inc. and certain of its former officers and directors, and the financial giant’s former outside auditor, ruling that the settlements are procedurally and substantively fair (In re Bear Stearns Companies Inc. Securities, Derivative, and ERISA Litigation, MDL No. 08-md-1963, No. 08-2793, S.D. N.Y.).
U.S. Judge Robert W. Sweet of the Southern District of New York gave final approval of the settlements, $ 275 million of which will be paid by current owner of The Bear Stearns Cos. JPMorgan Chase & Co. Inc., while another $ 20 million will be paid by former outside auditor Deloitte & Touche LLP, to settle claims that the defendants violated Sections 10(b), 20(a) and 20A of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5 by misrepresenting Bear Stearns’ exposure to the subprime mortgage lending crisis.
Judge Sweet also approved lead plaintiff State of Michigan Retirement System’s request for $ 35.4 million in attorney fees and more than $ 2 million in litigation expenses, as well as its request for $ 31,053.14 in reasonable costs and expenses as lead plaintiff.
Moreover, Judge Sweet certified a class of all purchasers of Bear Stearns common stock from Dec. 14, 2006, to March 14, 2008, and approved the plan of allocation.
Judge Sweet further overruled two objections to the settlement, ruling that one of the objections was “conclusory and bereft of factual or legal support.” With regard to the other objection, which was filed by 14 people and entities that argued that the settlement amount was too small, Judge Sweet found that the settlement amount was reasonable.
After the Judicial Panel on Multidistrict Litigation issued its Aug. 18, 2008, order transferring a number of securities class action, shareholder derivative and Employee Retirement Income Security Act lawsuits to the District Court, the retirement system was named lead plaintiff and filed a consolidated amended class action complaint on behalf of all purchasers of Bearn Stearns common stock purchasers from Dec. 14, 2006, to March 14, 2008.
On Jan. 19, 2011, Judge Sweet denied the defendants’ motion to dismiss the amended complaint; soon after, the parties began settlement discussions.
On June 6, the retirement system moved for preliminary approval of the $ 275 million settlement with The Bear Stearns Cos. and former officers and directors James E. Cayne, Alan D. Schwartz, Warren J. Spector, Alan C. Greenberg, Samuel L. Molinaro Jr., Michael Alix and Jeffrey M. Farber (collectively, Bear Stearns defendants), and less than a week later, moved for preliminary approval of the $ 20 million settlement with Deloitte & Touche.
The retirement system is represented by Jeffrey C. Block, Patrick T. Egan and Justin Saif of Berman DeValerio in Boston, Joseph J. Tabacco Jr. and Julie J. Bai of Berman DeValerio in San Francisco and Thomas A. Dubbs, James W. Johnson and Michael W. Stocker of Labaton Sucharow in New York.