US - The Colorado Public Employees' Retirement Association (PERA) has reached a US$15.7m settlement with Qwest, a telecommunications company that lost shareholders over $1.6bn by artificially inflating its stock price in 2001.
The $42bn fund decided to forego a class action settlement with the Denver-based firm, announced on 5 January 2006, to pursue its own action because of excessive attorney fees and an inadequate recovery.
It comes after CalSTRS, which also opted out the class action, reached a $46.5m settlement with Qwest earlier this year.
Greg Smith, general counsel at PERA, said: “The recovery in the class action amounted to less than one cent on the dollar of damages caused by Qwest’s massive financial fraud. The strength of our case warranted a more substantial recovery on behalf of our members and beneficiaries.”
Retirement systems from the states of Alaska, Florida, New York, and Texas joined with Colorado PERA in initiating this successful separate proceeding, in which PERA recovered 38 times more than it would have if it had remained a part of the class action lawsuit.
The law firm of Entwistle & Cappucci of New York, which was used by the pension systems in the separate proceeding, charged a fee of 5% of the recovery while the legal counsel to the class ultimately had their requested fee of 24% reduced by the Court to 15% of the class recovery.
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