State Street Class Action Fee Probe Enmeshes Pension Fund Official
Reuters cited Ted Frank on the implications of the State Street class action case.
In an ominous order on Friday, U.S. District Judge Mark Wolf of Boston instructed the executive director of the Arkansas Teacher Retirement System to appear at a hearing Wednesday to defend the pension fund’s conduct as lead plaintiff in a $300 million class action against State Street Bank. This is no ordinary adequacy hearing: Judge Wolf said he has questions for fund officials based on a still-confidential report by a special master he appointed to investigate $75 million in fees awarded to plaintiffs’ lawyers from Labaton Sucharow, Lieff Cabraser Heimann & Bernstein and Thornton Law Firm. The judge wants to know whether the pension fund failed to safeguard the interests of State Street customers and whether the fund and its lawyers should be bounced from the case.
Wednesday’s hearing is likely to expose “substantial shenanigans,” said class action activist Ted Frank of the Competitive Enterprise Institute, an amicus in the State Street case. It’s rare, he said, for courts to examine the mechanics of relationships between institutional lead plaintiffs and their counsel, but Judge Wolf’s order suggests the State Street special master did. “Somebody did the digging and it’s apparently explosive,” Frank said.