Kessler Topaz wasn’t among the trio of plaintiffs firms that Cornerstone Research singled out last week for winning the biggest chuck of (declining) securities class action settlements over the past couple of years. But Kessler Topaz lawyers haven’t exactly been tightening their belts lately: In just the last four months, the firm (and its co-counsel) won a $300 million fee award for their $1.26 billion win in the Grupo Mexico shareholder M&A case and reached a half-billion dollar class settlement with Lehman Brothers directors and underwriters.
And now we can add another settlement to the list–this time in a consolidated ERISA class action brought by participants in JPMorgan Chase Bank’s securities lending program. On Friday lead class counsel Joseph Meltzer and Peter LeVan Jr. of Kessler Topaz moved for approval of a $150 million settlement in the case. The class is also represented by Dealy & Silberstein; Nix Patterson & Roach; Bernstein Litowitz Berger & Grossmann; and Wolf Haldenstein Adler Freeman & Herz. Paul, Weiss, Rifkind, Wharton & Garrison represents JPMorgan.
Manhattan federal district court judge Shira Scheindlin certified the class and appointed Kessler Topaz lead counsel in August 2010. In their amended complaint, the pension plan plaintiffs accused JPMorgan of recklessly investing their securities lending cash collateral in notes issued by a structured investment vehicle called Sigma Finance before Sigma went bust in late 2008. They also alleged that JPMorgan provided Sigma with repurchase financing to protect its own money market fund investments and then “pulled the plug” on the repo financing once the funds were made whole, leaving the plaintiffs to suffer from Sigma’s collapse. Judge Scheindlin granted summary judgment to JPMorgan on the plaintiffs’ duty of loyalty claim related to the repo financing in August 2011, allowing the case to move toward trial on the pension funds’ remaining duty of prudence and state law contract claims.
Friday’s $150 million deal must still be approved by Judge Scheindlin, who will also determine the amount of the plaintiffs firms’ fee award. The plaintiffs’ motion for preliminary approval describes more than two years of “hard fought” on-and-off settlement negotiations, including formal and informal mediation before retired federal district court judge (and current Irell & Manella partner) Layn Phillips.
We left a message with Kessler Topaz’s LeVan to ask how the settlement stacks up against class members’ alleged losses, but we didn’t hear back. JPMorgan counsel Lewis Clayton of Paul Weiss declined to comment.