A Boston judge’s probe into potential overbilling in the $300 million securities lawsuit against State Street Corp. has led to questions about potential public corruption involving plaintiffs’ lawyers and an Arkansas pension fund, National Law Journal reports.
U.S. District Judge Mark Wolf questioned the executive director of the Arkansas Teachers Retirement Fund about the pension system’s relationship with major plaintiffs’ firm Labaton Sucharow. He asked about “referral fees” involving a former Arkansas state legislator and two Texas plaintiffs’ lawyers, one of whom the judge said “didn’t do any work for” the lawsuit. In the sealed report, that lawyer said Labaton asked him to introduce the firm to institutional investors in Arkansas. According to the judge, that lawyer will get 20 percent of Labaton’s fees in this case.
Also at issue is a statement from the pension’s executive director about how Arkansas political leaders “convinced” him to pursue securities class action lawsuits that could have led to introductions to Labaton attorneys. A University of Michigan Law School professor said the questions raised in this case could represent the “murky underworld of how securities fraud class action firms acquire their clients.”