Class lawyers were worried about AG settlement with Bank of America

John O'Brien Apr. 15, 2011, 1:28pm


NEW YORK (Legal Newsline) - A December settlement to which Bank of America agreed with the federal government and several states was a source of uneasiness for the lawyers in a multidistrict litigation against the company earlier this year.

The lead attorneys for a class of plaintiffs suing Bank of America over alleged bid-rigging activities sought to prevent the 20 state attorneys general who signed into the December settlement from enforcing an opt-in provision. That provision would've provided notice of the opt-in clause to eligible plaintiffs.

In March, U.S. District Judge Victor Marrero denied that request, though he ruled that Bank of America would not send notice to plaintiffs in the MDL of the opt-in clause.

"Class plaintiffs argue that State Agreement was negotiated without their participation, and that the opt-in provisions of the State Agreement have the potential to reach an extinguish the claims of a portion of potential plaintiffs in (the MDL), at least with respect to claims asserted against Bank of America," Marrero wrote.

Marrero ruled that he would not enjoin Bank of America from proceeding with certain provisions of the agreement, but it could only disseminate the notices to class members in the MDL with the court's permission.

West Virginia Attorney General Darrell McGraw's claims against Bank of America and 24 other defendants is a part of the MDL. He did not join in the 20-state agreement with Bank of America, which is alleged to have conspired to manipulate the municipal bond market.

McGraw says the conspiracy affected the sale of financial contracts by state agencies and local municipalities that were paid for with the proceeds of bond sales.

McGraw says the state did not receive substantial interest payments because bid rigging allowed companies to sell their financial products to state agencies at lower rates of interest than normal.

McGraw hired his brother's nephew to represent the State. Cook Hall & Lampros of Atlanta is one of three firms representing the state, along with Charleston's Berthold Tiano & O'Dell and DiTrapano Barrett & DiPiero. All three firms have contributed to McGraw's election campaigns.

Edward Shuff Cook is the nephew by marriage of former state Supreme Court Justice Warren McGraw, Darrell's brother. His bio says he has been appointed a special assistant attorney general in several states.

Darrell McGraw hired Cook, then at Provost Umphrey, in 2001 for a case involving law firm Steptoe & Johnson.

Employees of the Cook firm and their spouses have donated $20,000 to McGraw since 2004.

Also, the Berthold firm has donated $4,240 since 2004 and the DiTrapano firm, a frequent selection by McGraw to represent the state, donated at least $30,000 in 2004 and $5,050 in 2008.
The states taking part in the settlement were Alabama, California, Connecticut, Florida, Illinois, Kansas, Maryland, Massachusetts, Michigan, Missouri, Montana, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina and Texas.

The settlement required Bank of America to pay $67 million to the states and another $70 million to federal agencies, including the Securities and Exchange Commission.

The settlement provided restitution to state agencies, local governmental entities and nonprofit entities that entered into municipal bond derivative investments with Bank of America and who were harmed by the scheme.

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