It has taken six years and several settlements of US civil lawsuits for the criminal trial to commence in Belgium since the bankruptcy of Lernout & Hauspie Speech Products NV. (Wall Street Journal, subscription required; Belgian paper De Standaard’s expansive L&H file, in Flemish) Dexia and KPMG, both of whom have settled the civil litigation, are defendants in this trial, as well as a dozen company officials and a number of outsiders.
It’s important to note that, under Belgian law, civil suits can only commence after the conclusion of criminal suits. This one is expected to take years, so the non-US individual shareholders so far excluded from relief will have to wait far longer than their US counterparts for an outcome.
A collection of other noteworthy articles of the past few weeks in no particular order:
- Legal Week: McGrigors hire continues Cohen Milstein City push
- Legal Week: Europe rallies troops as class action brigade heads this way
- The American Lawyer: Securities Class Actions Ebb, but Europe’s Corporations Are Wary
- Financial Times: Spitzer moves to update Wall St regulation
- International Herald Tribune: Investor activism gains momentum
- Financial Times: Corporate activism ‘pioneer’ sets sights on US; on Anne Simpson of ICGN in a series on activist investors (article, subscription required; series)
And one more that anyone, especially of the plaintiffs or defense bar alike, is invited to comment on here or there: The Times‘ Don’t sue fellow shareholders, by columnist Graham Searjeant. What he says:
Apart from pitching hedge and pension funds against small investors, it [‘uninsurable class actions from shareholders’] undermines the legitimacy of companies trying to maximise shareholder value.
What’s more: Schiffrin Barroway Topaz & Kessler LLP acted as Counsel in the Shell and Tyco actions (for the Opt-Out Plaintiffs and as Co-Lead Class Counsel, respectively), both of which are being referred to in the The Times article. Darren J. Check, a partner with the firm, has submitted the following comment in response to the article:
[S]uch generalized statements that lawsuits and settlements are unfair are merely attacks on the plaintiffs bar with little substance to back the claims. While it is true that many of the current shareholders of companies like Tyco and Royal Dutch Shell may not have been shareholders during the time of the alleged fraud, there is a responsibility for companies to clean up the messes they have made and to do their best to compensate those investors that did suffer losses.
In addition, these op-ed pieces often ignore the corporate governance changes achieved in many class action settlements and the deterence factor implicit in these settlements. Lastly, on fees, I would simply emphasize again that plaintiff’s attorneys bear a great deal of risk in these actions and the fees that they collect are much more like the 10% you saw in Shell and not the often publicized 33%-40%. The bottom line is that there is a role for litigation when it comes to investors, under the right circumstances.