12/07/2011 09:12:00 AM EST
$507M In Settlements Reached With Lehman Officers, Directors, Underwriters
NEW YORK - In a motion made available on Dec. 5, lead
plaintiffs in a securities class action lawsuit against Lehman Brothers
Holdings Inc., certain of its formers officers and directors and others asked a
federal judge in New York to approve two settlements totaling $507 million to
settle claims with a number of the defendants for alleged federal securities
law violations (In re Lehman Brothers Securities and ERISA Litigation,
MDL No. 09-2017, [In re Lehman Brothers Equity/Debt Securities Litigation,
No. 08-5523], S.D. N.Y.; See October 2011, Page 26).
Lead plaintiffs filed their motion for authorization to
notify class of proposed settlement in the U.S. District Court for the Southern
District of New York, asking Judge Lewis A. Kaplan to approve a $417 million
settlement with 42 underwriters of Lehman Brothers stock and a $90 million
settlement with former Lehman Brothers CEO Richard S. Fuld Jr., former Chief
Financial Officers Christopher M. O'Meara, Erin Callan and Ian Lowitt, former
Chief Operating Officer Joseph M. Gregory and nine former members of the Lehman
Brothers board of directors.
Underwriter defendants Cabrera Capital Markets LLC,
Charles Schwab & Co. Inc., HVB Capital Markets Inc., M.R. Beal & Co.,
Muriel Siebert & Co. Inc., Siebert Capital Markets, UBS Financial Services
Inc., Williams Capital Group L.P. and Incapital LLC are not subject to the proposed
settlement agreement; however, according to a footnote in the motion, the lead
plaintiffs contend that "confidential term sheets have been entered into with
each of the underwriter defendants, except for UBS Financial Services, Inc.,
and Lead Counsel expect to consolidate such settlements into the settlement
process for the Underwriter Settlement."
Continue To Litigate
The lead plaintiffs aver that they will continue to
litigate their claims against the remaining nonsettling underwriter defendants,
as well as defendant and former Lehman Brothers auditor Ernst & Young LLP
Moreover, the lead plaintiffs contend that they have met
all Federal Rules of Civil Procedure 23(a) and 23(b)(3) requirements for class
The lead plaintiffs filed a third amended complaint in
the District Court on behalf of all purchasers of Lehman Brothers common stock,
call options and/or sellers of Lehman Brothers options from June 12, 2007, to
Sept. 15, 2008, as well as a class of all those who purchased options in
offerings that occurred pursuant to a May 30, 2006, shelf registration
statement and related offering documents and Securities and Exchange Commission
The lead plaintiffs alleged that the officers and
directors, underwriter defendants and E&Y issued a series of false and
misleading statements in the offering documents concealing Lehman Brothers'
true business and financial condition in violation of Sections 10(b), 20(a) and
20A of the Securities Exchange Act of 1934, Securities and Exchange Commission
Rule 10b-5 and Sections 11, 12(a)(2) and 15 of the Securities Act of 1933.
The lead plaintiffs are represented by Max W. Berger,
Steven B. Singer and Boaz Weinstein of Bernstein Litowitz Berger &
Grossmann in New York, David R. Stickney, Elizabeth P. Lin and Jon F. Worm of
Bernstein Litowitz in San Diego and David Kessler, John A. Kehoe, Benjamin J.
Hinerfeld, Michelle M. Newcomber, Richard A. Russo Jr. and Nicole Browning of
Barroway Topaz Kessler Meltzer & Check in Radnor, Pa.
Fuld is represented by Patricia M. Hynes, Andrew R.
Davies and Todd S. Fishman of Allen & Overy. O'Meara is represented
by Guy Petrillo and Joshua Klein of Petrillo Klein. Gregory is
represented by Audrey Strauss and Israel David of Fried, Frank, Harris, Shriver
& Jacobson. Callan is represented by Dietrich L. Snell, Mark E.
Wiener, Robert J. Cleary and Seth D. Fier of Proskauer Rose. Lowitt is
represented by Martin J. Auerbach of Dornbush, Madelstam & Silverman.
All are in New York.
The directors are represented by Adam J. Wasserman,
Andrew J. Levander and Kathleen N. Massey of Dechert and Mary E. McGarry in
Simpson Thacher & Bartlett. All are in New York.
The underwriters are represented by Mitchell A. Lowenthal
of Cleary Gottlieb Steen & Hamilton in New York.
E&Y is represented by Jamie L. Wine and Miles N.
Ruthberg of Latham & Watkins in New York,
Kevin H. Mertz of Latham & Watkins in Washington,
D.C., and Peter A. Wald of Latham &
Watkins in San Francisco.
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