X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
A New York judge has given a boost to Milberg Weiss Bershad & Schulman by appointing the embattled law firm co-lead counsel in a consolidated suit over stock option backdating. One of the nation’s leading securities plaintiffs firms, Milberg Weiss’ ability to carry on with client matters has been in question since the firm and two of its name partners — David Bershad and Steven Schulman — were indicted in May on charges they paid illegal kickbacks to class action plaintiffs. All pleaded not guilty last week in Los Angeles federal court. But Manhattan Supreme Court Justice Richard Lowe said in a decision dated July 13 that the firm’s indictment had no bearing on its ability to handle a batch of derivative suits on behalf of individual investors in voicemail software company Comverse Technology, Inc., whose top executives allegedly enriched themselves by almost $400 million by repricing stock option grants. The judge said the primary consideration was that none of the individual investors objected to the consolidation of their suits with Milberg Weiss serving as co-counsel with Schiffrin & Barroway of Radnor, Pa. “Moreover, none of the attorneys here for Milberg Weiss have been indicted or have been accused of any wrongdoing,” Lowe wrote in a footnote in Sollins v. Alexander, 601272/06. “Finally, the court stresses that unless and until Milberg Weiss is found guilty for the actions upon which it has been indicted, the presumption of innocence is binding here.” The partner leading the case for Milberg Weiss is Benjamin Kaufman. Lowe consolidated under the control of Milberg Weiss and Schiffrin & Barroway several state court actions that had been filed over the Comverse stock options. A number of federal suits have also been filed in the Eastern District of New York. The appointment in the high-profile Comverse backdating scandal would have been barely noteworthy for Milberg Weiss in the past, but since its indictment a number of judges around the country have questioned whether the firm should be awarded lead counsel status in upcoming matters. Senior partner Melvyn I. Weiss on Monday hailed Lowe’s decision as a “ray of sunshine.” “This court has made a statement that the presumption of innocence is binding,” said Weiss. “It’s amazing to me that judges all over America aren’t saying this.” Objections to Milberg Weiss serving as lead counsel in the Comverse case had been led by rival plaintiffs firms Bernstein Litowitz Berger & Grossman and Berman DeValerio Pease Tabacco Burt & Pucillo, who were representing the Louisiana School Employee’s Retirement System (LSERS) in a bid for lead plaintiff status. Berman DeValerio has offices in Boston, San Francisco and West Palm Beach, Fla. Though Lowe agreed that those two firms were also well qualified to lead the suit, he said he was lending considerable weight to the fact that Milberg Weiss’ client had been first, in April 2006, to file suit over the backdating issue, less than a month after Comverse’s board of directors announced it was investigating options grants. But Lowe also said in his footnote it was “disingenuous” for Bernstein Litowitz to raise the issue of Milberg Weiss’ indictment and its impact on the Comverse matter “since the attorney representing LSERS was himself a partner at Milberg Weiss, a member of its Management Committee, and was at Milberg Weiss when this action was commenced.” The judge was referring to Salvatore Graziano, who announced plans to leave Milberg Weiss in March. LEAD POSITION Bernstein Litowitz’s John P. Coffey said Monday the judge’s decision to award lead counsel status to the first plaintiff to file was not an unusual one. “That’s the way it works sometimes,” he said. But Coffey took issue with the judge’s “gratuitous” footnote concerning Graziano. He said the ex-Milberg Weiss partner had been minimally involved with his old firm’s suit and had withdrawn from representing LSERS early on, handing the case off to Gerald Silk. “The idea that he was somehow involved in this case is incorrect,” said Coffey. Bernstein Litowitz has been widely touted as the firm most likely to take the mantle of top securities class action firm in the wake of Milberg Weiss’ indictment. Weiss on Monday clearly took some pleasure in edging out a rival that had argued Milberg Weiss was unable to devote the necessary resources to the Comverse matter. “I think we’re still bigger than Bernstein Litowitz” he said. If so, Bernstein Litowitz is about to narrow the gap by one. Coffey said Milberg Weiss partner William Fredericks will be joining Bernstein Litowitz in September. A partner at Milberg Weiss for the past seven years who also previously worked as an associate at Simpson Thacher & Bartlett and Willkie Farr & Gallagher, Fredericks is a veteran of several major securities class action. Milberg Weiss has seen a number of partner departures since its indictment, though most have gone to considerably smaller firms.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.