Saturday, November 29, 2008

Greed, anger, reform, repair, lawyers, judges

Our county is surveying the wreckage in its financial system and a serious threat to its economic functioning, and it is learning unhappy lessons.

One theme coming out is how compensation structures led to abusive disregard for the property of other parties and resulted in great harm.

The culprits that gave the country subprime included banks and mortgage companies that ginned up gobs of current income for themselves without due regard for whether the home purchaser could afford the house in the long run. This was enabled by investment banks and bankers who, for large underwriting fees and personal compensation, engineered the packaging of mortgage loans into securities that could be sold to investors around the world, which took the risk off the banks and mortgage companies, and offloaded it onto distant investors who, as things turned out, did not understand what they bought. Not all the packaged loans could be sold off, and in order to make their underwriting deals work and get their fees and hefty personal compensation, the management at investment banks used their shareholders' equity to take up some of the securities, thereby sticking that undue risk on their shareholders. The subprime people also included the rating agencies that compromised their ratings work for the compensation they received from the underwriters. In Washington, the executives at Freddie Mac and Fannie Mae, in order to grow their exhorbitant compensation packages, were more than happy, using the taxpayer's credit, to have Freddie Mac and Fannie Mae inflate the bubble that burst and that became the debacle.

The foregoing litany, which could be extended, has focused anger on compensation structures for corporate executives, managers and other persons that resulted in commercial banks, mortgage companies, investment banks and other parties doing things without proper regard for the assets, property and value belonging to other parties, such as home buyers, investors, shareholders and taxpayers, and that ultimately did trillions of dollars of financial damage and put the nation's economy at risk.

As the country looks for ways to dig out of its problems, and as a new administration comes to Washington to lead the effort, the country is getting immersed in a new economic regimen of governmental investment and oversight that was inconceivable a year ago. The government, investors and public are taking a close look at compensation structures that led to damage to the economy. Where public funds have been brought to bear, the government has dictated limitations on executive compensation and the payment of dividends to stockholders.

With with all this attention to trying to understand the causes of the crisis, including the role of compensation structures, and how best to repair and rebuild the economy, this review should include looking at the country's legal system, the costs it imposes on the country, the compensation structures for plaintiffs' lawyers, and how the same has harmed the economy in the past and will hinder its rebuilding.

For many years, there has been strenuous contention that the legal system has been exploited by the plaintiffs lawyers to enrich themselves by imposing unjustifiable costs for the economy. For an excellent chronicle of this, see http://www.overlawyered.com/. Further consider how the plaintiffs' lawyers compensation structure has resulted in undermining the inculcation of ethical conduct by employees of corporations (see Does the Law Undermine Business Ethics? ). Consider also the destruction of shareholder value in Citigroup that was in the news last week. Citigroup shareholders who are angry at Citigroup executives for having compensation structures that led them to expose the shareholders to inappropriate risk in order to get underwriting business and thereby justify management paying themselves exhorbitant compensation should consider how something similar took place related to Citigroup's involvement with Enron earlier in the decade, and how the plaintiffs' lawyers, fueled by their compensation structure, complicitly enabled Citigroup's management and piled on to inflict even more damage on the hapless Citigroup shareholders. See Enron's smartest guys, crooks, victims and other saps.

With the Obama administration coming to Washingon, there is concern that the lawyers are going to be better positioned to promote their exploitive ways for enriching themselves at the expense of the rest of the society. With much repair work needed for the economy, and with the change in the national administration, now is more important than ever to bolster publicity and scrutiny of how the plaintiffs lawyers exploit the existing legal system to enrich themselves by imposing wasteful costs on the rest of the society and the need to lessen the economic drag of these costs that will hinder the country in repairing its economy and regaining the jobs and personal income that all of the citizens want.

Further, judges are the immediate overseers of the legal system. Just as other government regulators are under scrutiny for how well they performed in their oversight of activities that contributed to the current crisis, so judges ought to be scrutinized for how they have performed in overseeing the legal system and the costs that have been imposed on society. Primary attention should be given to the compensation structure of plaintiffs' lawyers and the deleterious effects of that. If those compensation structures were changed, and the amount of wasteful litigation lessened, the benefits would include savings of defense lawyers fees. Also judges could be more hard nosed about the fees they allow in bankruptcy cases, which would provide aid in rehabilitating and recycling business assets during the period of economic repair.

Thursday, November 20, 2008

Message for HR

Americans are experiencing significant pain and not a little anger from the worldwide plunge in the financial markets. Millions of employees are worried about their pension plans and retirement accounts. HR undoubtedly shares their employees' concerns, both for them as individuals and also for corporate compensation, morale and motivation objectives. Finger pointing about the financial and economic crisis has been taking place in order that corrective actions for the future may be taken. The below article does additional finger pointing towards that end. Employees and HR may consider the article worthy of their attention.

Why Aren’t Retirement Plan Trustees Screaming Bloody Murder?

Why aren’t retirement plan trustees screaming bloody murder?

At 5:30 p.m. this coming Friday, November 21st, there will be held in the federal district court in New York City a settlement hearing in a class action securities lawsuit bearing the name Monster Worldwide, Inc. Securities Litigation (http://www.berdonclaims.com/cases/details.asp?p=Main&CaseID=246). The lead plaintiff in this class action against Monster is Middlesex County Retirement System of Massachusetts.

The Monster case is cookie cutter litigation that the plaintiffs’ lawyers have been trotting around the country in recent years. In these cases, there are shareholders with real financial losses; there are also persons who are lucky and by chance walk away with windfall gains corresponding to those shareholder losses; and the plaintiffs lawyers have the shareholders with the losses sue the corporation for their losses. In the end, windfall gains remain in the hands of parties who are not before the court, and the lawsuit generates a circular payment that accomplishes a shuffling around of the losses among the shareholders who experienced the losses and also shifting a part of the losses to other shareholders who did not have losses (or windfall gain), and also shifts a part to some of the lucky persons who had windfall gains and who, by chance, are subject to a some partial reclamation of their windfall gains. In addition, the shareholder losses in question are more than just shuffled around; they are increased in total by the huge cut taken by the plaintiffs’ lawyers and also by very sizable fees of the lawyers who have to be hired to defend the corporation in the lawsuit.

Does the foregoing sound crazy? It is crazy, and you would think that, instead of aiding and abetting the plaintiffs’ lawyers in this type of litigation, Middlesex County Retirement System, as well as every other governmental retirement system and corporate retirement plan trustee in the country, would be screaming bloody murder about such craziness. Maybe the reason they have not done so is that they have just been plain snookered by a plaintiffs’ lawyers’ sleight of hand.

Some further detail is needed to explain this.

These class action lawsuits occur in the context of an accounting or other stock price related fraud that has occurred (or allegedly occurred).

If there has been such fraud, accountants, and officers and directors and others, who participated in the fraud should be held liable for damages, fines and imprisonment under applicable civil and criminal securities fraud laws. Also if the corporation sold stock and received the proceeds in connection with the fraud, there is a legitimate claim for recovery against the corporation. Neither persons such as officers, directors or accountants, nor proceeds received by the corporation, are the crux of the cookie cutter litigation exemplified by the Monster lawsuit. The crux is a tricky sleight of hand by the plaintiff’s lawyers.

The plaintiffs’ lawyers sue the corporation and third parties such as officers and directors and accountants. They allege that the defendants perpetrated the accounting or other fraud that resulted in the price of the corporation’s stock being artificially inflated during a period of time starting when the fraud began and ending when the fraud became publicly known, thereby causing the stock price to no longer be artificially inflated by reason of the fraud.

Now comes the sleight of hand by the plaintiffs’ lawyers. If there was fraud and the stock price was artificially inflated for a period of time, some persons (let’s call them the “unlucky” shareholders) who bought shares in the marketplace during that period will indeed experience losses from the fraud. The problems is, for every unlucky shareholder who bought shares and paid an artificially inflated price, the seller of those shares in the marketplace (let’s call these shareholders the “lucky” shareholders) got a windfall gain of receiving an artificially inflated price and that windfall gain is then in their pockets. The situation is thus that there are unlucky shareholders who have real financial losses from the fraud, there are the lucky shareholders who got windfall gains equal to the losses, and there are innocent bystander shareholders who did not receive any windfall gain but who also did not experience any losses (such as shareholders who bought before the start of the artificially inflated period and did not sell before the end of the period, or shareholders who bought after the end of the inflation period) .The sleight of hand of the plaintiffs lawyers is to keep mum about the fact that there will not be recovery from the lucky shareholders the windfall gains that they got by chance as a result of the fraud and who have walked away with such gains, and instead the plaintiffs lawyers will shuffle the losses around by having the shareholders who experienced the losses sue the corporation that generates a big payment from the corporation which is divvied up among unlucky shareholders who had losses from the fraud in proportion to the amount of their losses from the fraud.

How does this shake out? The burden of the big payment from the corporation is shared on an equal share basis by all current shareholders. The “lucky” shareholders who are no longer shareholders and have walked away with their windfall gains will bear no burden of the corporation’s big payment and their windfall gains will be completely untouched. “Lucky” shareholders who sold shares at an inflated price and got a windfall gain and who are still shareholders at the end of the inflation period because they did not sell all their shares or because they bought back shares at a lesser price will bear a burden of the corporation’s big payment in proportion to the shares they own at the end of the period, they will not get any share of the big corporate payment, and hence they have their windfall gain reduced to some extent. Innocent bystander shareholders (such as those who bought before the beginning of the artificial inflation period and held their shares throughout the period) have a share of the losses shifted onto them through their share of the burden of the big corporate payment. As to “unlucky” shareholders, some may no longer be shareholders, bear no burden of the corporation’s big payment, and will have their losses reduced by receiving their share of the big payment. Of the “unlucky” shareholders who are current shareholders, some will have their loss reduced on a net basis because their share of the burden of the big corporate payment by the corporation will be less than the share of the payment they receive based on the amount of their losses; for other “unlucky” shareholders, the burden of the corporation’s big payment on them will be greater than the share of the corporation’s big payment that they receive based on their amount of losses, so, on a net basis, their loss will be increased as a result of the litigation.

The plaintiffs’ lawyers big fee will come out of the corporation’s big payment, and the corporation will also pay sizable attorney fees to the corporation’s lawyers representing it in the class action lawsuit. All of these legal fees will increase the aggregate loss ultimately borne by the “unlucky” shareholders and by the innocent bystander shareholders.

In the Monster class action, the amount of the big corporate payment (the burden of which is borne by all current shareholders on an equal per share basis) will be $47,500,000. Presumably. the lucky shareholders in Monster obtained total windfall gains of at least that amount (and perhaps many times that amount). To an unknown extent there will be lucky shareholders who have walked away with their windfall gains and these windfall gains will be completely untouched by the litigation. The plaintiffs lawyers will take 25% of the $47,500,000, and the balance will be distributed among shareholders who had losses from the fraud. The net effect of this increases total losses by the aggregate of all attorney fees (25% of $47,500,000 for the plaintiffs attorneys plus whatever fees Monster has to pay to its lawyers) and shuffles $47,500,000 of the losses around as previously described, i.e., some “unlucky” shareholders effectively have their losses decreased, some "unlucky" shareholders have their losses increased, some of the losses get shuffled onto innocent bystander shareholders, and some “lucky” shareholders have their windfall gains reduced.

In 2007 there was consummated a cookie cutter class action involving Tyco Corporation (see http://blogs.wsj.com/law/2007/11/01/three-plaintiffs-firms-to-ask-for-460-million-in-tyco-suit/?mod=WSJBlog#commentsThe) that had much more eye popping numbers. In that case, the big corporate payment from Tyco was $2,975,000,000 (total windfall gains of lucky Tyco stockholders presumably being at least that much, and possibly many times more), and the plaintiffs’ lawyers claimed $460,000,000 in attorneys fees for their services. Those services increased total losses by the amount of the fee plus the amount of legal fees of Tyco’s lawyers and shifted otherwise shifted around $2,975,000,000 in losses among the shareholders who had losses from the fraud and shuffling some of the losses onto innocent bystander shareholders of Tyco, to some chance extent reduced some of the windfall gains of some of the lucky Tyco stockholders in Tyco. In a further cookie cutterclass action that is currently being finalized involving Xerox Corporation (http://www.gilardi.com/xeroxsettlement), the amount of the big circular corporate payment will be $670,000,000, and the cut of the plaintiffs' lawyers will be 20%, or $134,000,000.

To repeat,you would think that, instead of aiding and abetting the plaintiffs lawyers in the Monster class action, Middlesex County Retirement System, as well as every other governmental retirement system and corporate retirement plan trustee in the country, would be screaming bloody murder about the craziness their stock investments are being subjected to by these kinds of lawsuits. Maybe the reason they have not so is that they have been just plain snookered by the plaintiffs’’ lawyers’ sleight of hand.

Our country is on the brink of its worst economic crisis in decades, and our country's huge governmental retirement systems, as well as thousands of private pension plans, and millions of 401(k) owners, have now collectively experienced trillions of dollars of losses in the financial markets. Maybe governmental retirement systems and corporate retirement plan trustees will stop being snookered and start screaming bloody murder about what the plaintiffs lawyers have been doing in order for the lawyers to enrich themselves by possibly billions of dollars and thereby pile on further reductions in the value of stock investments of the retirement plans. (For further commentary on plaintiff lawyers' predations on innocent bystander shareholder value, go here.)

Why aren’t government retirement systems screaming bloody murder?

At 5:30 p.m. this coming Friday, November 21st, there will be held in the federal district court in New York City a settlement hearing in a class action securities lawsuit bearing the name Monster Worldwide, Inc. Securities Litigation (http://www.berdonclaims.com/cases/details.asp?p=Main&CaseID=246). The lead plaintiff in this class action against Monster is Middlesex County Retirement System of Massachusetts.

The Monster case is cookie cutter litigation that the plaintiffs’ lawyers have been trotting around the country in recent years. In these cases, there are shareholders with real financial losses; there are also persons who are lucky and by chance walk away with windfall gains corresponding to those shareholder losses; and the plaintiffs lawyers have the shareholders with the losses sue the corporation for their losses. In the end, windfall gains remain in the hands of parties who are not before the court, and the lawsuit generates a circular payment that accomplishes a shuffling around of the losses among the shareholders who experienced the losses and also shifting a part of the losses to other shareholders who did not have losses (or windfall gain), and also shifts a part to some of the lucky persons who had windfall gains and who, by chance, are subject to a some partial reclamation of their windfall gains. In addition, the shareholder losses in question are more than just shuffled around; they are increased in total by the huge cut taken by the plaintiffs’ lawyers and also by very sizable fees of the lawyers who have to be hired to defend the corporation in the lawsuit.

Does the foregoing sound crazy? It is crazy, and you would think that, instead of aiding and abetting the plaintiffs’ lawyers in this type of litigation, Middlesex County Retirement System, as well as every other governmental retirement system in the country, would be screaming bloody murder about such craziness. Maybe the reason they have not done so is that they have just been plain snookered by a plaintiffs’ lawyers’ sleight of hand.

Some further detail is needed to explain this.

These class action lawsuits occur in the context of an accounting or other stock price related fraud that has occurred (or allegedly occurred).

If there has been such fraud, accountants, and officers and directors and others, who participated in the fraud should be held liable for damages, fines and imprisonment under applicable civil and criminal securities fraud laws. Also if the corporation sold stock and received the proceeds in connection with the fraud, there is a legitimate claim for recovery against the corporation. Neither persons such as officers, directors or accountants, nor proceeds received by the corporation, are the crux of the cookie cutter litigation exemplified by the Monster lawsuit. The crux is a tricky sleight of hand by the plaintiff’s lawyers.

The plaintiffs’ lawyers sue the corporation and third parties such as officers and directors and accountants. They allege that the defendants perpetrated the accounting or other fraud that resulted in the price of the corporation’s stock being artificially inflated during a period of time starting when the fraud began and ending when the fraud became publicly known, thereby causing the stock price to no longer be artificially inflated by reason of the fraud.

Now comes the sleight of hand by the plaintiffs’ lawyers. If there was fraud and the stock price was artificially inflated for a period of time, some persons (let’s call them the “unlucky” shareholders) who bought shares in the marketplace during that period will indeed experience losses from the fraud. The problems is, for every unlucky shareholder who bought shares and paid an artificially inflated price, the seller of those shares in the marketplace (let’s call these shareholders the “lucky” shareholders) got a windfall gain of receiving an artificially inflated price and that windfall gain is then in their pockets. The situation is thus that there are unlucky shareholders who have real financial losses from the fraud, there are the lucky shareholders who got windfall gains equal to the losses, and there are innocent bystander shareholders who did not receive any windfall gain but who also did not experience any losses (such as shareholders who bought before the start of the artificially inflated period and did not sell before the end of the period, or shareholders who bought after the end of the inflation period) .The sleight of hand of the plaintiffs lawyers is to keep mum about the fact that there will not be recovery from the lucky shareholders the windfall gains that they got by chance as a result of the fraud and who have walked away with such gains, and instead the plaintiffs lawyers will shuffle the losses around by having the shareholders who experienced the losses sue the corporation that generates a big payment from the corporation which is divvied up among unlucky shareholders who had losses from the fraud in proportion to the amount of their losses from the fraud.

How does this shake out? The burden of the big payment from the corporation is shared on an equal share basis by all current shareholders. The “lucky” shareholders who are no longer shareholders and have walked away with their windfall gains will bear no burden of the corporation’s big payment and their windfall gains will be completely untouched. “Lucky” shareholders who sold shares at an inflated price and got a windfall gain and who are still shareholders at the end of the inflation period because they did not sell all their shares or because they bought back shares at a lesser price will bear a burden of the corporation’s big payment in proportion to the shares they own at the end of the period, they will not get any share of the big corporate payment, and hence they have their windfall gain reduced to some extent. Innocent bystander shareholders (such as those who bought before the beginning of the artificial inflation period and held their shares throughout the period) have a share of the losses shifted onto them through their share of the burden of the big corporate payment. As to “unlucky” shareholders, some may no longer be shareholders, bear no burden of the corporation’s big payment, and will have their losses reduced by receiving their share of the big payment. Of the “unlucky” shareholders who are current shareholders, some will have their loss reduced on a net basis because their share of the burden of the big corporate payment by the corporation will be less than the share of the payment they receive based on the amount of their losses; for other “unlucky” shareholders, the burden of the corporation’s big payment on them will be greater than the share of the corporation’s big payment that they receive based on their amount of losses, so, on a net basis, their loss will be increased as a result of the litigation.

The plaintiffs’ lawyers big fee will come out of the corporation’s big payment, and the corporation will also pay sizable attorney fees to the corporation’s lawyers representing it in the class action lawsuit. All of these legal fees will increase the aggregate loss ultimately borne by the “unlucky” shareholders and by the innocent bystander shareholders.

In the Monster class action, the amount of the big corporate payment (the burden of which is borne by all current shareholders on an equal per share basis) will be $47,500,000. Presumably. the lucky shareholders in Monster obtained total windfall gains of at least that amount (and perhaps many times that amount). To an unknown extent there will be lucky shareholders who have walked away with their windfall gains and these windfall gains will be completely untouched by the litigation. The plaintiffs lawyers will take 25% of the $47,500,000, and the balance will be distributed among shareholders who had losses from the fraud. The net effect of this increases total losses by the aggregate of all attorney fees (25% of $47,500,000 for the plaintiffs attorneys plus whatever fees Monster has to pay to its lawyers) and shuffles $47,500,000 of the losses around as previously described, i.e., some “unlucky” shareholders effectively have their losses decreased, some "unlucky" shareholders have their losses increased, some of the losses get shuffled onto innocent bystander shareholders, and some “lucky” shareholders have their windfall gains reduced.

In 2007 there was consummated a cookie cutter class action involving Tyco Corporation (see http://blogs.wsj.com/law/2007/11/01/three-plaintiffs-firms-to-ask-for-460-million-in-tyco-suit/?mod=WSJBlog#commentsThe) that had much more eye popping numbers. In that case, the big corporate payment from Tyco was $2,975,000,000 (total windfall gains of lucky Tyco stockholders presumably being at least that much, and possibly many times more), and the plaintiffs’ lawyers claimed $460,000,000 in attorneys fees for their services. Those services increased total losses by the amount of the fee plus the amount of legal fees of Tyco’s lawyers and shifted otherwise shifted around $2,975,000,000 in losses among the shareholders who had losses from the fraud and shuffling some of the losses onto innocent bystander shareholders of Tyco, to some chance extent reduced some of the windfall gains of some of the lucky Tyco stockholders in Tyco. In a further cookie cutterclass action that is currently being finalized involving Xerox Corporation (http://www.gilardi.com/xeroxsettlement), the amount of the big circular corporate payment will be $670,000,000, and the cut of the plaintiffs' lawyers will be 20%, or $134,000,000.

To repeat,you would think that, instead of aiding and abetting the plaintiffs lawyers in the Monster class action, Middlesex County Retirement System, as well as every other governmental retirement system in the country, would be screaming bloody murder about the craziness their stock investments are being subjected to by these kinds of lawsuits. Maybe the reason they have not so is that they have been just plain snookered by the plaintiffs’’ lawyers’ sleight of hand.

Our country is on the brink of its worst economic crisis in decades, and our country's huge governmental retirement systems, as well as thousands of private pension plans, and millions of 401(k) owners, have now collectively experienced trillions of dollars of losses in the financial markets. Maybe governmental retirement systems will stop being snookered and start screaming bloody murder about what the plaintiffs lawyers have been doing in order for the lawyers to enrich themselves by possibly billions of dollars and thereby pile on further reductions in the value of stock investments of the retirement systems. (For further commentary on plaintiff lawyers' predations on innocent bystander shareholder value, go here.)

Friday, November 14, 2008

Letter to Dr. David Bronner, Alabama Retirement Systems

From: RDShatt
To: ersinfo@rsa-al.gov
Sent: 11/14/2008 4:39:30 A.M. Central Standard Time
Subj: Letter for Dr. David Bronner re: Middlesex County Retirement System


Letter for Dr. David Bronner re: Middlesex County Retirement System

Dear Dr. Bronner:

I have sent the below email to Mr. Thomas Gibson, Chairman of the Middlesex County Retirement System in Massachusetts. In my email to Mr. Gibson, I ask why the Middlesex County Retirement System is the lead plaintiff in a class action lawsuit against Monster Worldwide, Inc. that aids and abets plaintiffs' lawyers in their enterprise of having shareholders of corporations sue themselves to recover investment losses the shareholders have experienced and to have the shareholders make circular payments to themselves (that don't compensate for the losses because the shareholders are effectively making payment to themselves), all so that the plaintiffs lawyers can take a big cut and leave the shareholders all the poorer.

Our country is on the brink of its worst economic crisis in decades. The Retirement Systems of Alabama and other governmental retirement systems, as well as thousands of private pension plans, and millions of 401(k) owners, have collectively experienced trillions of dollars of losses in the financial markets, while plaintiffs lawyers are going around the country having shareholders sue themselves in order that the plaintiffs lawyers can collect hundreds of millions of dollars of fees for themselves.and make the shareholders, including The Retirement Systems of Alabama, all the poorer.

Is my analysis correct? Am I missing something here? Why aren't governmental retirement systems screaming bloody murder about this? Would you mind taking the time to answer these questions?

Thank you.

Sincerely,

Robert Shattuck
3812 Spring Valley Circle
Birmingham, AL 35223
(205) 967-5586


[email sent to Mr. Thomas Gibson]

Email to Steven Syre of Boston Globe

From: RDShatt
To: syre@globe.com
Sent: 11/13/2008 7:21:08 P.M. Central Standard Time
Subj: Middlesex County Retirement System

Dear Mr. Syre,

This email may seem meddlesome coming from a resident of Alabama, but I think, upon your full consideration that all citizens of the United States are affected, you will not see me as inappropriately meddling.

I have sent the below email to Mr. Thomas Gibson, Chairman of the Middlesex County Retirement System. In my email to Mr. Gibson, I ask why the Retirement System is the lead plaintiff in a class action lawsuit against Monster Worldwide, Inc. that aids and abets plaintiffs' lawyers in their enterprise of having shareholders of corporations sue themselves to recover investment losses the shareholders have experienced and to have the shareholders make circular payments to themselves (that don't compensate for the losses because the shareholders are effectively making payment to themselves), all so that the plaintiffs lawyers can take a big cut and leave the shareholders all the poorer.

I hope you will take an interest in this story. I have some ways in mind that I am going to pursue this matter further, and I will keep you informed of what I do.

Thank you.

Sincerely,

Robert Shattuck
3812 Spring Valley Circle
Birmingham, AL 35223
(205) 967-5586


[email sent to Mr. Thomas Gibson]

Email to Middlesex County directors and staff

From: RDShatt
To: Tgibson@middlesexretirement.org
Sent: 11/13/2008 11:52:42 A.M. Central Standard Time
Subj: Re: Middlesex County Retirement System v. Monster Worldwide Inc.


Re: Middlesex County Retirement System v. Monster Worldwide Inc.


To the Directors and Staff of Middlesex County Retirement System:

Your Retirement System is the plaintiff Class Representative in the above class action lawsuit. (For more information about your Retirement System's lawsuit you can go here: http://www.berdonclaims.com/cases/details.asp?p=Main&CaseID=246.)

Do you understand your Retirement System's lawsuit?

Do you understand how your plaintiffs lawyers and others like them are going around the country with this kind of litigation and filing lawsuits that are in substance shareholders of a corporation who have had losses suing themselves to recover the losses, the plaintiffs lawyers have the shareholders effectively make a payment to themselves (that doesn't compensate for any losses because the shareholders are paying it to themselves), and the plaintiffs lawyers take a big cut out of the payment and leave the shareholders that much the poorer on top of the investment losses the shareholders previously experienced?

In your Retirement System's lawsuit against Monster Worldwide, Inc., your Retirement System and other shareholders of Monster Worldwide, Inc. experienced investment losses and they are in effect going to make a payment to themselves of $47.5 million and the Retirement System's plaintiffs lawyers in the case, Labaton Sucharow LLP of New York City, will take a 25% cut of that, and leave your Retirement System and other shareholders with increased losses. Other class action plaintiffs lawyers are in the process of doing the same thing to Xerox Corpopration shareholders and having the Xerox shareholders in effect sue themselves to recover investment losses (which won't be recovered and will only be increased), and I wrote a letter to the judge in that Xerox case that details this insanity. You may read that letter here: Letter to Judge Thompson. The plaintiffs lawyers in the Xerox case previously had Tyco Corporation shareholders sue themselves, and the lawyers took a whopping $465,000,000 out of the pockets of the shareholders, which you can read about in the Wall Street Journal Blog. (Maybe your Retirement System owned Xerox or Tyco stock and had investment losses that were increased courtesy of these plaintiffs lawyers.)

Our country is on the brink of its worst economic crisis in decades. Your Retirement System and other governmental retirement systems, as well as thousands of private pension plans, and millions of 401(k) owners, have collectively experienced trillions of dollars of losses in the financial markets, while these plaintiffs lawyers are going around the country having shareholders sue themselves in order that the plaintiffs lawyers can collect hundreds of millions of dollars of fees for themselves.and make the shareholders all the poorer.

That should make you very angry.

I hope you will ask yourselves why is your Retirement System involved in the Monster Worldwide litigation and why is your Retirement System aiding an abetting these plaintiffs lawyers in their enterprise of having shareholders of corporations sue themselves to recover investment losses and make payments to themselves (that don't compensate them for losses because they are effectively making payment to themselves), all so that the plaintiffs lawyers can take a big cut and leave the shareholders all the poorer.

After you have had internal discussion at the Retirement System, I hope someone on behalf of the Retirement System will ask the Retirement System's class action lawyer Ms. Zeiss of Labaton Sucharow LLP to explain and defend this insanity. After that, I further hope someone on behalf of the Retirement System will go to the fairness hearing scheduled for next Friday in the federal district court in New York City and ask the judge in the case also to explain and defend the insanity.

Sincerely,
Robert Shattuck
3812 Spring Valley Circle
Birmingham, AL 35223
(205) 967-5586

Middlesex County Retirement System

The Middlesex County Retirement System in Massachussetts is the lead plaintiff in a class action lawsuit against Monster Worldwide, Inc. that, in my opinion, aids and abets plaintiffs' lawyers in their enterprise of having shareholders of corporations sue themselves to recover investment losses the shareholders have experienced and to have the shareholders make circular payments to themselves (that don't compensate for the losses because the shareholders are effectively making payment to themselves), all so that the plaintiffs lawyers can take a big cut and leave the shareholders all the poorer.

Our country is on the brink of its worst economic crisis in decades. Governmental retirement systems, including in my state of Alabama, as well as thousands of private pension plans, and millions of 401(k) owners, have collectively experienced trillions of dollars of losses in the financial markets, while plaintiffs lawyers are going around the country having shareholders sue themselves in order that the plaintiffs lawyers can collect hundreds of millions of dollars of fees for themselves.and make the shareholders, including such retirement systems, pension plans and 401(k) plans, all the poorer.

I think trustees and corporate sponsors should be screaming bloody murder.

We'll see.

Monday, November 3, 2008

Election Eve thoughts- End corruption in Washington

Lawmakers have a responsibility of a specific nature and also a responsibility of a general nature that are relevant to the subject matter of this blog.

The specific responsibility is that lawmakers make the laws that determine the contours and rules of our civil liability system, and, if that system is being abused by the plaintiffs' lawyers and is not properly serving societal interests, our lawmakers have the authority and responsibility to correct that through legislation.

Second, lawmakers have a responsibility in a general way to be ethical public servants who act honestly and in good faith in passing laws, including establishing regulatory and criminal law apparatus, that attempt to achieve a defensible balance of societal interests, including the protection of consumers. Frequently lawmakers fail this responsibility, and instead they furtively do the bidding of campaign contributors in casting votes and sponsoring legislation that the contributors want but that are not defensible in a proper and good faith discharge of the lawmaker's responsiblity as an ethical public servant. This is particularly evidenced by lawmakers lying and dissembling about and hiding from voters what the lawmaker's actions have been and the reasons for those actions. Consequences of this corruption include that lawmakers become derelict in tending to legislative business they ought to be tending to for their consitutuents, and further the laws they enact are viewed as the tainted result of bribes and corruption that need not be respected and that may be overridden by judges and juries. This is particularly the case in areas of consumer protection where business is viewed as having corrupted the legislative process.

In the 2006 elections, the issue of corruption in Washington was viewed to have figured very prominently. It has also been viewed as an important issue in the 2008 Presidential election. I personally felt it should have been the most important issue to the voters in the 2008 Presidential election. My reasons for this are detailed in a separate blog of mine that may be found at this link.

All of us as citizens should have an interest in ending the culture of corruption in Washington. This culture of corruption in Washington, as indicated above, also has bearing on issues related to tort reform and on nuturing ethical business conduct that are discussed in this blog. Thus it seems appropriate to make this election eve entry here.