Financial Institutions Dominate Top 10 Largest Securities Class Action Settlements of 2012

FRT Admin
Site administrator
January 22, 2013

While in many ways the financial crisis of 2008 is well in our nation’s rear view mirror (Obama had yet to be elected for the first time when it hit, let alone be re-elected), the crisis was front and center in the class action claims recovery industry in 2012. A quick scan of the ten largest settlements of 2012 reveals that financial institutions represent 7 of the 10, and all result from claims emanating from that 2008 timeframe. Bank of America topped the list having settled a class action for $2.43 billion at the end of last year regarding its merger with Merrill Lynch. Citigroup and two Lehman Brothers cases account for the second, third, and fourth highest settlements. Citigroup settled for $590 million due to scandal surrounding collateralized debt obligations and other mortgage securities. Lehman Brothers settled two different cases, one pertaining to directors & officers for $516 million and another $426 million settlement pertaining to equity/debt underwriters.

The remaining financial institutions topping the list of last year’s settlements are Bear Stearns, AIG, and Morgan Keegan. Bear Stearns settled a class action for $294 million due to false statements the company made in regards to its subprime mortgage exposure. AIG claimed to have issued false statements and failed to disclose information regarding illegal transactions and commissions, resulting in a $115 million settlement. Morgan Keegan investors claimed they had mispriced bonds which affected the NAV price of several mutual funds, for which the company settled for over $100 million.

The rest of the top ten is rounded out by settlements for Motorola, Pharmacia, and the El Paso Corporation. In the Motorola case, which settled for $200 million, the class claimed that the company failed to disclose to investors that it had failed to meet its revenue and sales projections because of a lack of 3G phones to sell in Europe. Pharmacia’s settlement of $164 million was a result of false and misleading statements made by the company regarding their anti-inflammation drug, Celebrex. Lastly, El Paso investors claimed that there was a breach in the organization’s fiduciary duties to stock holders in the negotiation of the merger between El Paso Corporation and Kinder Morgan, Inc., which resulted in a $110 million settlement.

The claim deadlines for most cases in the top ten have passed, except for Pharmacia (January 28), Citigroup (March 8), and Bank of America (April 25). While it can be difficult for an institutional investor to have late filings accepted, Financial Recovery Technologies (FRT) has developed strong relationships with claims administrators. FRT has a history of getting claims submissions accepted past deadline, so contact FRT with questions regarding these cases or any other securities class actions.

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Founded in 2008, Financial Recovery Technologies (FRT) is a leading technology-based services firm that helps the investment community identify eligibility, file claims and collect funds made available in securities and other class action settlements. Offering the most comprehensive range of claim filing and monitoring services available, we provide best-in-class eligibility analysis, disbursement auditing and client reporting, and deliver the highest level of accuracy, accountability and transparency available. For more information, go to www.frtservices.com.

 

This communication and the content found by following any link herein are being provided to you by Financial Recovery Technologies (FRT) for informational purposes only and does not constitute advice. All material presented herein is believed to be reliable but FRT makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Opinions expressed in this communication may change without prior notice. Firms should always seek legal and financial advice specific to their unique situation and objectives.