And I have to say, I’d be ticked too.
Plaintiffs got a little gift in their mailboxes last week: they received notice of the proposed settlement from the AG Edwards class action. Guess how much some plaintiffs are receiving? The initial report of the proposed settlement put the average payout at $20-25 customer. One commenter at LawyersAndSettlements.com quotes his notice as saying he’ll receive $20.42. You can read the notice yourself at agedwardsclassactionsettlement.com. (Note the name change of the website—prior to the proposed settlement, the site was agedwardsclassaction.com; the URL has been updated to reflect that the case now has a propsed settlement.)
Keep in mind, if you’ve read the comments that came flowing in from our post on where the AG Edwards class action suit was heading, many of the Class Members claim they lost their “life savings” compliments of AG Edwards. And remember, this was back during a class period of 2000 – 2005—not post-2008 when we all saw our savings take a dive.
The AG Edwards class action had been brought against the brokerage firm in 2005 claiming that AG Edwards breached its fiduciary duties to the Plaintiffs (folks who owned AG Edwards accounts) and that AG Edwards was “unjustly enriched by receiving millions of dollars in improper payments from mutual fund companies whose funds were held by Plaintiffs“. The Class Period had covered five years—and getting to a proposed settlement then took five years.
That’s a long time to wait for some resolution and ideally, restitution.
Another aspect of the proposed settlement is what the lawyers’ take will be. Apparently it’s $21 million—plus $600,000 in expenses. That’s 35% of the total proposed settlement of $60 million—and an average of approximately $12.91 per eligible AG Edwards brokerage account for Class Members.
Additionally, to put this in perspective, of that $60 million, $6 million is actually going to be paid out to the settlement class of about 294,000 former AG Edwards account holders (that’s the $20.42 from above)—and the rest? That’s roughly $34 million if you back out the lawyers’ fees—that’s going to be doled out as vouchers for current clients to use on broker fees in future stock purchases. Note, the vouchers go to potentially 1.38 million current customers and each voucher is valued at $24.65. Woohoo!
Before you get too excited about that $24.65, note that the voucher will not be one voucher, but three–each valued at one-third of the voucher total; and you’ll only be able to use them on a set schedule over a three-year period (i.e., one voucher’s for the first year after vouchers have been distributed, one is for the second year afer…you get it). Again, all this info is at agedwardsclassactionsettlement.com.
Now, ordinarily I try to bring some perspective to those of you out there who get all riled up at the size of the attorneys’ fees that are awarded in class action settlements. Typically, you’ve got multi-year litigation and several law firms involved—each of whom have a cadre of attorneys, paralegals, admin staff, etc and travel and overhead that needs to be covered; and the law firms have to lay out the cash (translation, work without getting a dime in income) for two, three…five years until a case settles. A few million dollars in some instances doesn’t even begin to cover the expenses that have been laid out by the firms involved.
However, in this instance, where you’ve got Class Members who are—in many instances—older, retired or now near retirement who lost damn near everything they had and now find themselves receiving the equivalent of some family meal deal at Boston Market, well… It’s not a question of whether the attorneys deserve the money, it’s a question of proportion: 35% to the lawyers, 10% to the plaintiffs—who without, the lawyers would not have their 35% and who without AG Edwards would not have some of its millions.
If you’re a class member and received your notice, you do have the option to file an objection—by April 29, 2010. To object, you need to write a letter stating that you object to the proposed settlement and state your reasons for objecting. Include your name, address, telephone number and signature. The addresses where you have to send the letter are listed on page five of the notice of proposed settlement (see agedwardsclassactionsettlement.com). You may also—at your own expense—show up at the Settlement Fairness Hearing—and be heard, witnesses, evidence and all—but if you plan to go that route, get a lawyer to represent you and you’ll need to ensure that any witnesses you plan to call upon and/or any exhibits you have as evidence are identified in your letter of objection.
The AG Edwards Settlement Fairness Hearing will be held on May 14, 2010 at 9:30 a.m., central time at the St. Louis City Circuit Court, Civil Courts Building, 10 North Tucker Boulevard, St. Louis, MO 63101-2044.