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"Oddly enough, I admired one of the lawyers."

Bill McClellan of the St. Louis Post-Dispatch writes about the Bachman v. A.G. Edwards case and settlement:

The case against Jones was murky. The payments from the mutual fund companies were not illegal. In fact, news accounts at the time said they were common, and were called revenue sharing. But the feds decided that Jones had not disclosed to its customers that brokers were getting extra money for steering clients into certain funds.

The feds did not make that allegation against A.G. Edwards, but the class-action lawyers figured that if this so-called revenue sharing was common, A.G. Edwards must be doing it, and so the lawyers went ahead and filed their lawsuit in April 2005 contending that Edwards was guilty of whatever it was that Jones had done.

As is typical in these cases, the defendant company denied all wrongdoing but eventually decided it was cheaper to pay off the lawyers than to wage a long legal battle. So A.G. Edwards rolled over, and the class-action lawyers negotiated a settlement in which their "clients" would get coupons while they themselves would get cash -- and bundles of it.

Update: Dan Fisher of Forbes comments here.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.