Reverse Auction

The Wall Street Journal has extensive coverage (subscrip. req’d) this week of an unusual turn of events in the class action pending against KPMG in the D. of Ark. The case was filed by the law firm of Bernstein Litowitz and alleges fraud in connection with the sale of certain tax shelters. In a recent motion, Bernstein Litowitz claims that another plaintiffs’ firm, Milberg Weiss, is “colluding” with KPMG to put together a new suit with a “pre-packaged settlement … presumably on terms less favorable to the class.”

The motion describes the situation as a “reverse auction,” with KPMG attempting to negotiate a weak settlement that will preclude other settlements. Bernstein Litowitz is seeking to halt any settlement negotitations, be designated interim class counsel, and prevent Milberg Weiss from filing its own suit. In today’s follow-up article, the paper reports that Bernstein Litowitz apparently has obtained confirmation that the talks between KPMG and Milberg Weiss are ongoing.

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