Report: Class action lawyers looking for $150M
NEW YORK (Legal Newsline) - Class action attorneys will reportedly ask for $150 million in fees as a result of Friday's $2.43 billion settlement with Bank of America.
The settlement resolved allegations that Bank of America misled its investors in the months leading to a shareholder vote over the purchase of Merrill Lynch. Alison Frankel of Reuters wrote Friday that attorneys will be asking U.S. District Judge Kevin Castel for $150 million.
Lead counsel in the case included the firms Bernstein Litowitz Berger & Grossman and Topaz Kessler Meltzer & Check.
Though Frankel wrote the firms are deserving of the award, Daniel Fisher of Forbes wrote that he is skeptical.
"First of all, how hard was it to convince the new management at BoA, led by Chief Executive Brian Moynihan, to hand over another couple of billion dollars to end one of the last significant civil cases stemming from his predecessor Ken Lewis's bungled tenure?" Fisher wrote.
"Ohio (Attorney General Mike) DeWine, a Republican, boasts his state Teachers Retirement System and the Ohio Public Employees Retirement System 'will receive a total of $20 million.' Did he need to hire lawyers for $150 million to achieve that result?
"Maybe, but I'm guessing some of the lawyers in his own department could have done as well."
The lead plaintiff group includes two Ohio public pension funds, the Teacher Retirement System of Texas and two European public pension funds.
It was former Ohio Attorney General Richard Cordray, a Democrat, who initiated the funds' involvement in the case. He is now the head of the federal Consumer Financial Protection Bureau. Kaplan Fox & Kilsheimer represented the Ohio funds.
The Kaplan firm contributed $270,000 to the Ohio Democratic Party in 2007-08. The Bernstein firm contributed $175,000.
Bank of America allegedly misled investors in the months leading up to its 2008 purchase of Merrill Lynch. It was alleged that it withheld Merrill Lynch's heavy fourth quarter losses before a shareholder vote on the purchase.
It also allegedly withheld Merrill Lynch's plan to spend up to $5.8 billion in executive bonuses after the merger.
The bank says the litigation expense, improvements in credit spreads and a tax charge will decrease third-quarter earnings per share by 28 cents.
In August 2010, Castel dismissed claims relating to the alleged failure of Bank of America to disclose Merrill Lynch's 2008 losses.
From Legal Newsline: Reach John O'Brien at email@example.com.