Plaintiffs’ Lawyers to Receive All the Cash in Moody’s Derivative Settlement
20th August 2012
Could the only cash payment so far from a credit rating agency in shareholder litigation stemming from the financial crisis go entirely to plaintiffs’ lawyers?
It’s entirely possible, based on documents filed this week in consolidated shareholder derivative litigation against Moody’s. Moody’s agreed to settle the cases last month, in a deal that requires the rating agency to institute corporate governance reforms but nets not a penny for shareholders. The only money Moody’s agreed to pay is $4.95 million to the plaintiffs’ firms that filed the suit, including Morris and Morris, Greenfield & Goodman and Kahn Swick & Foti. On Monday, the firms asked U.S. District Judge George Daniels of Manhattan to grant final approval to the settlement and fee award.
‘Great news! We won the case!’
‘Great news indeed! How much did we win?’
‘Well, the lawyers won $4.95 million.’
‘Uh, okay. What did the shareholders win?’
‘Moody’s promised not to do it again.’
And there you have modern American justice, boys and girls.
Greenfield, however, said the corporate governance reforms Moody’s agreed to adopt are worth a lot to shareholders and justify the fee request. “The nature of the relief is of substantial value,” he said.
Just not the sort of ‘value’ you can spend.