I thought my ship had come in when I received in the mail yesterday a notice from the Missouri Circuit Court, 22nd Judicial District, City of St. Louis, informing me that I may be a class member in a class action lawsuit against A. G. Edwards brokerage. “You may be a Class Member and entitled to benefits from the settlement of this certified class action lawsuit,” the Court informed me. It seems that I held shares of mutual funds between April 12, 2000, and April 12, 2005, during which time Defendants A. G. Edwards Inc. and A.G. Edwards & Sons breached their fiduciary duty to me and to other customers and were thereby unjustly enriched. The parties have agreed to settle this lawsuit (I read, salivating with anticipation and greed) for a total of $60 million. There are a few speed bumps. “The parties disagree on both liability and the amount of relief obtainable by the Class.” There is also a dispute over whether state law claims are preempted or precluded by federal law. The malevolent defendants admit to receiving and retaining revenue sharing payments from certain mutual fund companies. As I read it, A. G. Edwards got payola to invest my money, and that of 1,672,924 of my fellow victims, in second- or third-rate mutual funds. This kind of sleazy behavior is exactly why litigation is important and why we need trial lawyers to protect us from these corporate predators. Now we get to the heart of the matter. What do I get? When can I buy that ranch I have always wanted? “Defendants are depositing $26 million in in cash into an escrow account which will earn income for the benefits of the Class, and defendants will distribute $34 million in Individual Credit Vouchers to be used by Class Members who maintain current accounts with Wells Fargo Advisors (which acquired A. G. Edwards after the latter was unjustly enriched to my detriment), against certain fees that would otherwise be charged by Wells Fargo Adivsors….” And here it is: “How much will my benefit be? Your recovery will be $24.65 in individual credit vouchers…or $20.42 in cash.” So much for the ranch. And how much will the lawyers get? “Plaintiffs’ counsel will move the Court for a fee award from the cash portion of the settlement in an amount not to exceed $21 million, which is 35% of the $60 million settlement. Plaintiffs’ counsel will also seek to reimburse plaintiffs’ counsel for approximately $600,000 in out-of-pocket expenses incurred in connection with the prosecution of this lawsuit as well as to compensate them for their time and effort prosecuting this case over the past five years. The requested fees and expenses…amount to an average of approximately $12.91 per eligible A.G. Edwards brokerage account.” Let me see now. Not only have I been robbed and defrauded by A.G. Edwards, not only has my misfortune allowed the lawyers to get rich, but I have to pay the bastards too. Meanwhile, Wells Fargo gets to jack up its fees and I get a credit voucher to pay them. In the end, what has this lawsuit accomplished? In all likelihood, it will be settled without a determination of fault. That’s the way class actions work. The lawyers get everything, the victims get enough money to buy eight gallons of gas, and the defendant gets away with fraud and unjust enrichment on a grand scale. I remember a class action in Houston, a few years back, involving plumbing pipe, where the lawyer got a nine-figure fee and the victims got a section of plastic pipe. Is there any public good achieved by cases like this? I don’t see it. Trial lawyers like to portray themselves as the cops of the business world, who track down corporate wrongdoers and extract punishment on behalf of the public. Many years ago, a friend of mine who was a trial lawyer told me, “Corporations aren’t afraid of the government. But they’re terrified of lawyers. We’re the only thing that keeps them honest.” But to what end? $26,600,000 for them, $20.42 for me. It’s not worth my time to file for the recovery. Are trial lawyers really a deterrent? To the Wells Fargos of the world, they are merely a nuisance. Was BP deterred by threat of a lawsuit from cutting corners? Obviously not. Will the threat of a class action suit make Wells Fargo think twice the next time it wants to pull some financial shenanigans? I doubt it. You can’t read a political press release these days without coming across the word “outrageous.” It is totally overworked, but this is a situation to which it applies. Show me the public good that will occur as the result of this lawsuit. None that I can see. It probably broke A. G. Edwards. In the resulting acquisition, lots of people lost their jobs. I get these notices with some regularity. If I traveled on such-and-such airline between so-and-so dates, I may have been injured by defendants’ actions. I just throw them in the trash. The only reason I read this one is that it involved my personal finances. No one — no one — benefits from this except the lawyers.
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