Cooperation

(1) The New York Law Journal has an article on the assistance being provided by Refco’s ex-CEO, Phillip R. Bennett, to the investors suing the company for securities fraud. The unusual cooperation came to light when plaintiffs’ counsel submitted a letter to the court in conjunction with Bennett’s criminal sentencing.

Quote of note: [Plaintiffs’ counsel] said he would not mind a reduction, however slight, in Bennett’s sentence because of his cooperation with shareholders’ lawyers. ‘It would be a helpful future precedent,’ he said.”

(2) Of course, cooperating with plaintiffs’ counsel can go too far, as illustrated by the Milberg Weiss indictment. Point of Law has a post on the presentation of a new paper by Professor Michael Perino (author of the leading PSLRA treatise) finding that investors may have been damaged in cases where Milberg Weiss improperly compensated the lead plaintiff.

Quote of note: “These findings cast doubt on Milberg Weiss’ claim that paying kickbacks was a completely victimless crime. They are consistent with the hypothesis that Milberg Weiss asked for and got a greater share of the settlements in these cases than it otherwise would—a real economic harm to the class members who therefore would have had a lower net recovery.”