Saturday, November 19, 2005
A Los Angeles Times story (here) about the government's ongoing investigation of possible kickbacks paid by plaintiff securities class action firm Milberg Weiss to lead plaintiffs in class action cases notes that leading partners Melvyn Weiss and David Bershad, along with now-former partner William Lerach, are targets of the investigation. The Times story discusses a 1995 class action, filed right before the PSLRA became effective, that may involve kickbacks to the lead plaintiffs, and that some participants in the case have been granted immunity, reportedly including Alan Schulman, a former Milberg Weiss partner who was lead counsel on the case.
It is not a great surprise that Lerach and Weiss are targets of the investigation because of their leading positions at the firm and heavy involvement in the plaintiffs class action bar. The statute of limitations issue remains a potential roadblock to a successful prosecution, however, because the adoption of the PSLRA in 1995 changed the rules for securities fraud class actions dramatically. The class action case being investigated settled in 1998, and any payments before the end of 2000 would fall outside the limitations period, although a conspiracy charge might be possible if there were overt acts in 2001 or later. The Legal Ethics Forum has an interesting post (here) on the investigation. (ph)