Texas billionaire Sam Wyly has been in litigation over the settlement in the Computer Associates securities class action for years, alleging that plaintiffs’ counsel improperly settled the case for a low amount just prior to the company’s public disclosures of accounting fraud. The 10b-5 Daily has previously posted about Wyly’s efforts to obtain documents related to the case (see here, here, and here). Having finally obtained the documents earlier this year, Wyly has brought a fraud action in New York state court against the relevant plaintiff law firms. Newsday has an article on the suit.
Quote of note: “The heart of Wyly’s claim is the distinct difference between two sets of shareholder lawsuits filed against CA — one in 1998 following a sharp drop in CA’s share price, and another in 2002 following revelations of federal probes of CA’s accounting. . . . The suit takes exception with the law firms’ claims that allegations in the two suits were largely similar and therefore could be combined for the purposes of a settlement. The suit claims that if allegations in the latter suit had been properly researched and argued, the settlement would have been much larger. Instead, Wyly’s suit argues, the 2002 suit never even reached the discovery phase.”
Addition: An alert reader notes that Wyly has not actually been given the documents he was seeking from plaintiffs’ counsel. According to the relevant court docket, production has been stayed pending an appeal of the court’s decision.