Progress on class-action suits slow and uneven
Page 2 of 2 -- The suits seek an unspecified amount of damages from the mutual fund companies. But an attorney for one of the defendants said that for the plaintiffs to receive any money, they will have to show that damages collectively total more than the $2 billion that fund companies have already agreed to reimburse shareholders under their settlements with regulators.
Meanwhile, other fund firms appear to be in no mood to settle with plaintiffs. For example, T. Rowe Price has not been charged by any federal or state regulator, yet has so far been included as a defendant in the federal proceeding. T. Rowe's lead counsel in the case, Daniel A. Pollack, said the plaintiffs are "picking on the wrong fund group."
Pollack also is representing Franklin Templeton Investments in the class-action case. The San Mateo, Calif., fund giant yesterday agreed to pay $5 million to Massachusetts, and $50 million in August to federal regulators, to settle charges that it allowed some investors to market-time its funds. But Pollack said Franklin has no interest in negotiating a deal with the class-action plaintiffs because the firm believes the timing incidents were isolated, and that it otherwise took "strong" steps to stop such trading in its funds.
Pollack added that he did not think a settlement between one fund firm and its plaintiffs would serve as a template for other settlements because the circumstances differed so much from company to company.
Another company that apparently isn't discussing a settlement is the Columbia Funds unit of the former FleetBoston Financial Corp., said attorneys in the proceeding. In March Columbia agreed to pay $140 million to settle its market-timing case with regulators. A spokeswoman for Bank of America Corp., which bought Fleet in March and is combining the Columbia operations with its own Nations Funds unit, declined to comment. Bank of America agreed in March to pay $375 million to settle a myriad of improper trading charges, and Nations Funds is a defendant in the class-action proceeding.
Meanwhile, plaintiffs are required to file amended complaints against the fund companies by the end of September, and the judges in the case have scheduled hearings in February and March on motions by the companies to dismiss the case.
Andrew Caffrey can be reached at email@example.com.
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