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AOL securities class action



Josh Gerstein in the New York Sun has been doing some reporting on the $2.5 billion settlement over financial misstatements by Time Warner's America On-Line subsidiary, as well as the course of opt-out litigation:

In a little-noted ruling in October, the federal judge overseeing the class settlement, Shirley Kram of Manhattan, awarded $147.5 million in fees and $3.4 million in expenses to the lead attorneys in the case, Heins, Mills & Olson [alas, no relation -- W.O.]. The Minneapolis firm represented the plaintiff found to have the most at stake in the litigation, the Minnesota State Board of Investment.

However, one of the holdouts in the overall deal, the state of Alaska, has obtained an unusually rich settlement for itself, raising uneasy questions for those who signed onto the deal. Meanwhile, Cardozo Law School ethicist Lester Brickman (an occasional adviser to this site)

said he remains skeptical of the value of such suits. "They're transferring the assets of current Time Warner shareholders to prior Time Warner shareholders, with a substantial transaction fee charged by the lawyers," he said. "If you look at the totality of most securities litigation, it involves transferring money from your left pocket to your right pocket, subject to a transfer fee of as high as 30% or 35%."

More: Adam Savett also covered the story at Lies, Damn Lies, and Forward Looking Statements.

 

 


Rafael Mangual
Project Manager,
Legal Policy
rmangual@manhattan-institute.org

Katherine Lazarski
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.