Mutual Fund Market Timing settlements restrict recovery with unreasonable document requirements

Added: (Mon Aug 23 2010)

Pressbox (Press Release) - A review of the proposed settlements of market timing cases under In re Mutual Funds Investment Litigation, MDL-1586 (D. Md.) shows that the interests of small shareholders have been ignored for the convenience of the defendants and the lawyers. Class counsel has proposed settlements which require shareholders to provide records which are in some cases over 12 years old. Defendants have access to records of all shareholders in all funds involved in the settlement, were required to save the records due to the pending litigation and provided names and addresses to identify class members for class counsel. These defendants are clearly in a far better position than individual class members to provide the records needed to identify and process valid claims.

In many Mutual Fund Market Timing cases this information was already used to distribute the proceeds of the SEC Fair Fund. Considering the fact that under normal circumstances brokers are only required to save client records for seven years it seems unreasonable to require individual investors to produce records that are certainly in the possession of the defendants in these cases. Judges in other cases have recognized the need to adjust the standard proof of claim requirements in securities cases when the transactions were completed many years before a settlement was reached. The IPO Securities Litigation (21 MC 92) is the largest class action case in history with 309 cases coordinated in the Southern District of New York. In her Order approving the settlement of these cases Judge Shira A. Scheindlin addressed a similar situation regarding documentation of claims:

“A requirement that potential class members provide documentation is not unusual in securities litigations. This measure is implemented for the purpose of reducing the number of fraudulent claims. Nevertheless any documentation requirements must be reasonable in light of the time that has passed since many of these securities were traded. The Court had therefore ordered plaintiffs counsel and GCG to post a notice on the IPO website, notifying potential class members that they should submit all proofs of claim no matter the lack of appropriate documentation. Thus all potential class members who wish to participate in this settlement but who cannot locate appropriate documentation are nonetheless encouraged to submit their claims documents – GCG and plaintiff’s counsel are directed to attempt, in good faith, to determine each claim’s eligibility for participation”

The proposed settlements of the Mutual Fund Market Timing cases provide no recovery at all unless the Class member has damages of at least $10 in some cases and at least $50 in others. Most companies charge more than this as a fee to research transactions this old and offer no assurance that they will successfully locate records. In addition to the difficulty many class members have with the required documentation there are many valid reasons to object to the proposed settlements, plans of allocation and attorney fee and expense requests.

If you would like to read the Court documents relating to the proposed settlements go to the Court approved websites found at www.mutualfundsettlements.com. If you would like a concise listing of all of the Mutual funds involved in the settlements or want to explore the possibility of having an experienced lawyer attend the settlement hearing and object on your behalf without expense go to www.mutualfundobjector.com or E Mail tabechtold@mutualfundobjector.com.