are you sure, or is your time clock broken?
are you using tea leaves, a crystal ball or
moon phases to know what the future will be?
lma(zz)o a dose of reality follows:
Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises
Hearing entitled "Investor Protection: A Review of Plaintiffs' Attorney Abuses in Securities Litigation and Legislative Remedies."
Wednesday, June 28, 2006
Printed Hearing: 109-102
financialservices.house.gov
INVESTOR PROTECTION: A REVIEW
OF PLAINTIFFS’ ATTORNEY ABUSES IN
SECURITIES LITIGATION AND
LEGISLATIVE REMEDIES
Wednesday, June 28, 2006
U.S. HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON CAPITAL MARKETS, INSURANCE,
AND GOVERNMENT SPONSORED ENTERPRISES,
COMMITTEE ON FINANCIAL SERVICES,
Washington, D.C.
...A recent indictment of the country’s
leading securities firm, Milberg Weiss, and
revelations accompanying this indictment raise
2
significant questions. Are plaintiffs’
interests in class action suits really being
treated in the most appropriate manner?
The actions alleged in the indictment are
egregious. Over a 20-year period, Weiss and
two of the named partners allegedly kicked
back millions of dollars to individuals in
exchange for serving as the named plaintiffs
in more than 150 class action and shareholder
derivative suits. The scheme allegedly
manufactured suits for the firm and solidified
its dominance in the arena of securities
cases. If these allegations are
proven to be true, the firm and the attorneys
engaged have breached their fiduciary duty to
the investors whom they are charged to
represent. The dominance of the Weiss firm is
unparalleled. There is a Anjan V. Thakor
study of 755 securities class action
settlements over a 10-year period. The firm
handled 43 percent of the settlements,
netting $1.7 billion in fees and expenses.
The second nearest competitor came in at a
meager 7.8 percent,just under $200 million.
Although dominant 10 years ago, Milberg Weiss
allegedly continued to abuse its dominance by
engaging in this scheme of kickbacks up
until, reportedly, 2005, until after the U.S.
Attorney began its investigation. With these
allegations before us, and H.R. 5491, it is
appropriate the committee review the industry
practice and behavior to determine if
investor protection requires us to act in a
more direct manner. These actions, I feel,
are justified, warranted, and to ensure
reasonable investor protection, there may
be a need, in fact, to do more, but the
provisions of the bill, I think, at a
minimum, are essential. Finally, there are
those who question even the propriety of the
hearing. Mr. Weiss, in his response to me, at
our voluntary invitation for him to appear,
questioned the committee’s legitimacy and
right to conduct this examination....
3
And I wish to be very clear. Mr. Weiss is not
under indictment. He actually continues his
practice as of this moment, representing
numerous plaintiffs in class action suits.
He was voluntarily invited today to discuss
the actions that the firm was taking to
ensure that the alleged abuses would no
longer continue. Instead, he has chosen
simply to question the motivations of the
committee as well as my personal motivation.
His letter, of course, will be made public.
I do consider the response an unprofessional
one to this committee’s inquiry. However,
despite the absence of Mr. Weiss, whom I
believe refuses to appear because further
discussion and disclosure about the conduct
would perhaps further degrade the firm’s
reputation, we do have a very distinguished
panel, a panel that I know will not shy
away from legitimate discussion on how to
best provide investor protection.... |
