[letter (in email form) sent to Court in Regions Morgan Keegan case]
From: RDShatt@aol.com
To: jbernstein@labaton.com, rcs@cabaniss.com, pfruin@maynardcooper.com, blatham@bassberry.com, larry.polk@sutherland.com, kevinlogue@paulhastings.com
Sent: 3/29/2013 9:51:43 A.M. Central Daylight Time
Subj: In re Regions Morgan Keegan Closed-End Fund Litigation, No. 07-cv-02830 SHM dkv
VIA US MAIL
Clerk of the Court
United States District Court for the Western District of Tennessee
Clifford Davis/Odell Horton Federal Building
167 North Main Street, Room 242
Memphis, Tennessee 38103
Re: In re Regions Morgan Keegan Closed-End Fund Litigation, No. 07-cv-02830 SHM dkv
Supplement to Objection of Robert Shattuck
To the Honorable United States District Court for the Western District of Tennessee:
I am an objector in this case and have previously sent my objection to the Court and to counsel by U.S. mail.
As indicated in my objection, this case, and the case In re Citigroup Securities Litigation Master File No. 07 MDL CIV 9901 (SHS), pending in Southern District of New York, have a certain legal similarity, and I have submitted an amicus objection in the Citigroup case that is very similar to my objection in this case.
I wish to report something from the Citigroup case which I think the Court should inform itself about in this case.
In the Citigroup case, Former United States District Court Judge Layn R. Phillips submitted to the Court a Declaration Regarding Approval Of Settlement, dated November 19, 2012, which Declaration may be found on the Internet at this URL: http://www.citigroupsecuritiessettlement.com/docs/Judge%20Phillips%20Declaration.pdf. I sent an email to Mr. Phillips asking some questions related to his Declaration, Mr. Phillips emailed me back saying I should serve my email on the parties in the Citigroup case to give them an opportunity to comment before he responded, and I proceeded to serve my email on the parties.
As my objection indicates, there is second similar case also pending in the Southern District of New York, IN RE BANK OF AMERICA CORP. Master File No. 09 MDL 2058 (PKC), and I sent a letter to the Court in that case, calling attention to the foregoing development in the Citigroup case.
Appended below are my letter to the Southern District of New York in the Bank of America case, my letter to the Southern District of New York making the requested service in the Citigroup case, the email I sent to Mr. Phillips, and Mr. Phillips' reply email to me.
As discussed in my objection, in all three cases, windfall gains were obtained by selling shareholders who sold shares at "artificially inflated prices," these windfall gains corresponded to losses to purchasing shareholders who paid the artificially inflated prices, the lawsuits are not intended or designed to recover, and by and large will not recover, the windfall gains that are in the pockets of the selling shareholders. This case is different from the Citigroup and Bank of America cases because the settlement in this case is not coming in substance from the closed end fund shareholders (as best I can determine) and thereby effectuating in substance a shifting around of losses among those who had losses; rather the recovery in substance is coming from Regions shareholders who did not benefit from the alleged wrongdoing (i.e., did not receive the windfall gains that corresponded to the losses caused by the alleged wrongdoing).
My objection urges the Court, In deciding whether or not to approve the settlement, to consider how the windfall gains are not being recovered from the selling shareholders who got the gains, that there is no deterrent value to this lawsuit, and this lawsuit should be treated as among real parties in interest who have no culpability, some of whom had losses and others of which are innocent bystanders who received no benefit. I have suggested to the Court that it request briefs from the parties discussing these matters.
Whatever comments may be made by the parties in the Citigroup case about my email, and whatever response is made by Mr. Phillips, could be helpful to the Court in this case regarding the foregoing points.
Regions shareholders probably have a greater reason to object to the settlement than shareholders of the closed end funds (such as myself), but Regions shareholders are not members of the plaintiff class. Regions ought to be arguing this matter on behalf of the Regions shareholders.
I have been in contact with the Alabama Attorney General and the Alabama Securities Commission urging them to speak up to the Court. I don't know whether they will.
If any further developments occur that I think the Court should be advised about, I will make further submissions.
I am sending paper copies of this email by US mail to the Court and to the counsel for the parties in this case as specified in the Notice, as well as sending this email electronically to such counsel per the above email addresses.
Respectfully submitted,
Robert Shattuck
3812 Spring Valley Circle
Birmingham, AL 25223
(205) 967-5586
[letter (in email form) sent to Court in Bank of America case]
From: RDShatt@aol.com
To: mwb@blbglaw.com, steven@blbglaw.com, rkaplan@kaplanfox.com, ffox@kaplanfox.com, dkessler@ktmc.com, gcastaldo@ktmc.com, bkarp@paulweiss.com, dkramer@paulweiss.com, asoloway@paulweiss.com, lphillips@irell.com
Sent: 3/26/2013 2:40:23 P.M. Central Daylight Time
Subj: Bank of America Corp., SDNY Master File No. 09 MDL 2058 (PKC)
BY US MAIL
United States District Court
Southern District of New York
Daniel Patrick Moynihan United States Courthouse
500 Pearl Street
New York, NY 10007-1312
IN RE BANK OF AMERICA CORP. Master File No. 09 MDL 2058 (PKC)
SECURITIES, DERIVATIVE, AND
EMPLOYEE RETIREMENT INCOME
SECURITY ACT (ERISA) LITIGATION
:::::
ECF CASE
To the Honorable United States District Court of the Southern District of New York:
I am an amicus objector in this case and have previously sent to the Court by U.S. mail my amicus objection.
This case, and the case In re Citigroup Securities Litigation Master File No. 07 MDL CIV 9901 (SHS), also pending in the Court, have substantial legal similarity, and I have submitted an amicus objection in the Citigroup case that is the same as my amicus objection in this case.
I wish to report something from the Citigroup case which I think the Court should inform itself about in this case.
In the Citigroup case, Former United States District Court Judge Layn R. Phillips submitted to the Court a Declaration Regarding Approval Of Settlement, dated November 19, 2012. I sent an email to Mr. Phillips asking some questions related to his Declaration, Mr. Phillips emailed me back saying I should serve my email on the parties in the Citigroup case to give them an opportunity to comment before he responded, and I proceeded to serve my email on the parties. Appended below is my letter to the Court making the requested service in the Citigroup case, and also the email I sent to Mr. Phillips and Mr. Phillips' reply email to me.
It appears that Mr. Phillips has been involved in the negotiations for settling this case. Although I do not see that Mr. Phillips submitted a Declaration to the Court in this case, I think, because of the legal similarity of the cases, it would behoove the Court to inform itself about my email in the Citigroup case, any comments the parties in the Citigroup case make about my email, and such response as Mr. Phillips makes after the parties have had an opportunity to comment.
The plaintiffs' lawyers in this case, in their Joint Declaration to the Court dated February 19, 2012, brag about the tremendous recovery they are making for the plaintiff class. I have been contending that windfall gains have gone into the pockets of stockholders who sold during the artificially inflated period, these windfall gains correspond to the losses caused to the purchasers of the stock as a result of the wrongdoing; the lawsuit does not seek recovery, and there will not be recovery (except possibly to a small, illogical extent), of these windfall gains going into the pockets of selling shareholders, and there will be only, in substance, a shuffling around of losses. Thus, in short, I believe the claims of the lead plaintiffs' and their counsel about the recovery being made in this case are false are misleading.
Also, the lead plaintiffs have been touting the deterrence benefit from their class action lawsuit. See this press release As laid out in my objection, I contend there is no purpose of deterring wrongdoing that is served by the lawsuit.
Those are my contentions. They form the basis of my email to Mr. Phillips in the Citigroup case. The parties in Citigroup are being given the opportunity to comment, and Mr. Phillips indicates that he will make response in due course.
I am sure the Court can appreciate my desire that the Court inform itself about my email, any comments of the parties, and such response as Mr. Phillips' makes to my email in the Citigroup case.
I am sending paper copies of this email by US mail to the Court and to the counsel for the parties in this case as specified in the Notice (and to Mr. Phillips), as well as sending this email electronically to such counsel (and to Mr. Phillips) per the above email addresses.
Respectfully submitted,
Robert Shattuck
3812 Spring Valley Circle
Birmingham, AL 25223
(205) 967-5586
This case, and the case In re Citigroup Securities Litigation Master File No. 07 MDL CIV 9901 (SHS), also pending in the Court, have substantial legal similarity, and I have submitted an amicus objection in the Citigroup case that is the same as my amicus objection in this case.
I wish to report something from the Citigroup case which I think the Court should inform itself about in this case.
In the Citigroup case, Former United States District Court Judge Layn R. Phillips submitted to the Court a Declaration Regarding Approval Of Settlement, dated November 19, 2012. I sent an email to Mr. Phillips asking some questions related to his Declaration, Mr. Phillips emailed me back saying I should serve my email on the parties in the Citigroup case to give them an opportunity to comment before he responded, and I proceeded to serve my email on the parties. Appended below is my letter to the Court making the requested service in the Citigroup case, and also the email I sent to Mr. Phillips and Mr. Phillips' reply email to me.
It appears that Mr. Phillips has been involved in the negotiations for settling this case. Although I do not see that Mr. Phillips submitted a Declaration to the Court in this case, I think, because of the legal similarity of the cases, it would behoove the Court to inform itself about my email in the Citigroup case, any comments the parties in the Citigroup case make about my email, and such response as Mr. Phillips makes after the parties have had an opportunity to comment.
The plaintiffs' lawyers in this case, in their Joint Declaration to the Court dated February 19, 2012, brag about the tremendous recovery they are making for the plaintiff class. I have been contending that windfall gains have gone into the pockets of stockholders who sold during the artificially inflated period, these windfall gains correspond to the losses caused to the purchasers of the stock as a result of the wrongdoing; the lawsuit does not seek recovery, and there will not be recovery (except possibly to a small, illogical extent), of these windfall gains going into the pockets of selling shareholders, and there will be only, in substance, a shuffling around of losses. Thus, in short, I believe the claims of the lead plaintiffs' and their counsel about the recovery being made in this case are false are misleading.
Also, the lead plaintiffs have been touting the deterrence benefit from their class action lawsuit. See this press release As laid out in my objection, I contend there is no purpose of deterring wrongdoing that is served by the lawsuit.
Those are my contentions. They form the basis of my email to Mr. Phillips in the Citigroup case. The parties in Citigroup are being given the opportunity to comment, and Mr. Phillips indicates that he will make response in due course.
I am sure the Court can appreciate my desire that the Court inform itself about my email, any comments of the parties, and such response as Mr. Phillips' makes to my email in the Citigroup case.
I am sending paper copies of this email by US mail to the Court and to the counsel for the parties in this case as specified in the Notice (and to Mr. Phillips), as well as sending this email electronically to such counsel (and to Mr. Phillips) per the above email addresses.
Respectfully submitted,
Robert Shattuck
3812 Spring Valley Circle
Birmingham, AL 25223
(205) 967-5586
[my letter to the Court making service of my email in Citigroup]
BY US MAIL
United States District Court
Southern District of New York
Daniel Patrick Moynihan United States Courthouse
500 Pearl Street
New York, NY 10007-1312
IN RE CITIGROUP SECURITIES Master File No. 07 MDL CIV 9901 (SHS)
LITIGATION
:::::
ECF CASE
REQUEST OF FORMER UNITED STATES DISTRICT JUDGE LAYN R. PHILLIPS
FOR SERVICE TO BE MADE ON PARTIES
To the Honorable United States District Court of the Southern District of New York:
I sent the below email to Mr. Phillips regarding his Declaration to the Court, dated November 19, 2012, and Mr. Phillips sent me a reply email (also below) that said I should serve my email on the parties to give them an opportunity to respond before Mr. Phillips comments. Accordingly, I am sending paper copies of this email by US mail to the Court and to the counsel for the parties as specified in the Notice (and to Mr. Phillips), as well as sending this email electronically to such counsel and to Mr. Phillips per the above email addresses.
Respectfully submitted,
Robert Shattuck
3812 Spring Valley Circle
Birmingham, AL 25223
(205) 967-5586
[my email to Mr. Phillips]
From: RDShatt@aol.com
To: lphillips@irell.com
Sent: 3/24/2013 1:42:59 P.M. Central Daylight Time
Subj: Citigroup - your Nov. 19, 2012 Declaration
Dear Mr. Phillips,
I am an amicus objector in the Citigroup Securities Litigation. You can find my amicus objection here.
I am writing to you concerning your Declaration to the Court. I don't know whether, in the extensive briefs the parties submitted to you, there was any argumentation about the two basic contentions I make in my objection, and I am taking the opportunity to call those contentions to your attention by this email.
I. No recovery of windfall gains; reallocation of losses
My analysis is that, to an unknown extent and in an unknown aggregate amount, selling shareholders during the artificially inflated period will walk away with windfall gains that correspond to losses incurred by purchasing shareholders, such windfall gains are either entirely out of the reach of the Court, or else the "recovery" (offset) of such windfall gain disregards the relative amounts of the windfall gains obtained by the selling shareholders as a result of the alleged wrongdoing, and, instead of "recovery" from selling shareholders who had windfall gains from the alleged wrongdoing, there will be in substance a shifting around and reallocation of losses among buying shareholders who incurred losses and other shareholders who had no windfall gain and suffered no loss (e.g. shareholders who bought their shares before the start of the artificially inflated period and held their shares throughout the period). Further, my analysis is that, not only is such unknown at the time of the settlement agreement, only purchasers who have losses from transactions during the artificially inflated period will submit claim forms, and the information provided by those claim forms will reveal little about how much selling shareholders will walk away with windfall gains as just described.
At one end of the possible spectrum, if all shareholders at the start of the artificially inflated period sold out during the artificially inflated period, 100% of the losses experienced by the purchasing shareholders from the alleged wrongdoing would be windfall gains in the pockets of the selling shareholder that would be entirely outside the reach of the Court, and be 100% kept by the selling shareholders. The purchasing shareholders who incurred the losses and other shareholders who purchased after the end of the artificially inflated period (and who had no gain or loss from the alleged wrongdoing) would, in substance in this scenario, contribute to the settlement fund in proportion to their shareholdings; some of the purchasing shareholders who had greater losses will have their losses effectively reduced, some who have lesser losses will have their losses effectively increased, and some losses will effectively get allocated to shareholders who had no gain or loss from the alleged wrongdoing.
At the other end of the spectrum, it is possible that there were no selling shareholders who sold out completely during the artificially inflated period, all shareholders in substance contribute to the settlement fund in proportion to their shareholdings, shareholders who had net gains from their transactions during the artificially inflated period will not participate in the settlement fund, and shareholders who had net losses from their transactions during the artificially inflated period can, after their effective contribution to the settlement fund, receive an allocation from the settlement fund that may be greater than the pro rata amount they effectively contribute to the settlement fund (i.e., reducing their overall loss), or the allocation may be less than the pro rata amount they effectively contribute to the fund (i.e., increasing their overall loss). Other shareholders (such as shareholders who owned shares at the start of the artificially inflated period, who held their shares throughout the period, and who had neither gain nor loss from the alleged wrongdoing) effectively get some losses allocated to them.
The respective amounts of windfall gains that selling shareholders obtain and will be allowed to keep as a result of the alleged wrongdoing is disregarded under the settlement. To highlight this, consider shareholders A, B and C, who each owned 100 shares at the start of the artificially inflated period. Say shareholder A sells 90 shares at the peak price during the artificially inflated period, shareholder B sells 90 shares at a much lower price during the artificially inflated period, and shareholder C holds his 100 shares throughout the artificially inflated period. None of A, B and C have losses from transactions during the artificially inflated period and so cannot share in the settlement amount. Shareholders A and B, who had, respectively, a large windfall gain and a much smaller windfall gain, will in substance make equal pro rata contributions to the settlement fund based on their 10 share ownership, and A will retain a much larger amount of windfall gain, and B a smaller amount of windfall gain. Shareholder C, who had neither a windfall gain nor a loss from the alleged wrongdoing, will make a pro rata contribution to the settlement fund based on a 100 share ownership (i.e., a much larger contribution than A or B).
(It is worth noting at least parenthetically here that the aggregate of the losses in all the scenarios, which losses are getting reallocated as described, are increased by plaintiffs' and Citigroup's attorneys fees.)
Am I correct that it was entirely unknown at the time of the settlement (and will never be known), the extent to which selling shareholders who sold during the artificially inflated period will walk away with windfall gains that are beyond the reach of the Court (if the shareholders completely sold out) or the amounts of windfall gains that they are allowed to keep will be kept in disregard of the relative amounts of their respective windfall gains, and the extent to which there is any "recovery" of those windfall gains will is unknown, and instead of "recovery" of windfall gains, there is effectively a reallocation of losses among purchasers who had losses or to shareholders who had no gain or loss from the alleged wrongdoing?
If my analysis is correct, did the parties argue in their respective briefs submitted to you about such an analysis and how it should affect what is a fair and reasonable settlement amount (or whether there should be a settlement amount at all)? Is the Court aware of the foregoing analysis? Do you think your declaration should have discussed the foregoing analysis for the benefit of the Court? Do you think you should modify your declaration to the Court?
II. No deterrent effect; case in substance among non-culpable real parties in interest
My second main contention is that the lawsuit in substance should be considered nothing more than a case of unjust enrichment among innocent, non-culpable real parties in interest, and there is no purpose of deterring wrongdoing that is served by the lawsuit.
Did the parties in their respective briefs submitted to you make any argument about the validity of the foregoing contention and whether the same should affect what is a fair and reasonable settlement? Do you think the Court views the litigation one way or the other regarding such contention. Do you think your declaration should have discussed the foregoing contention for the benefit of the Court? Do you think you should modify your declaration to the Court?
Thank you.
Rob Shattuck
Birmingham, AL
[reply email from Mr. Phillips to me]
From: LPhillips@irell.com
To: RDShatt@aol.com
Sent: 3/24/2013 6:46:37 P.M. Central Daylight Time
Subj: Re: Citigroup - your Nov. 19, 2012 Declaration
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