Hearing today on Qwest payout
Shareholders protest lawyers' 24% claim
By David Voreacos, Bloomberg News
Rocky Mountain News
Friday, May 19, 2006
Qwest Communications International Inc.'s agreement to pay $400 million to settle accounting fraud claims drew criticism from investors saying the plan to pay $96 million to lawyers is too lavish. The class-action settlement would resolve claims over bogus sales at Denver-based Qwest, the No. 4 U.S.
local phone company. Qwest lost $80 billion in market value from 1999 to 2002, as shares fell from $60 to $1.49. Some investors want lawyers led by Lerach Coughlin Stoia Geller Rudman & Robbins, who billed as much as $850 an hour, to get less than 24 percent of the total.
"When shareholders are receiving only about 15 cents a share on a market loss in excess of $58 per share during the class period, a $96 million windfall payment to class counsel out of the anemic recovery is inappropriate," Michael Budin, chief counsel of the Pennsylvania State Employees' Retirement System, wrote in a motion filed in Denver.
U.S. District Judge Robert Blackburn will hold a hearing today on the fairness of the plan, which Denver-based Qwest announced Nov. 1. Qwest also is paying $250 million to resolve a Securities and Exchange Commission investigation. Former Qwest CEO Joe Nacchio is under indictment for insider trading.
The Pennsylvania fund, with assets of $29 billion, joined other investors in objecting to fees sought by San Diego-based Lerach Coughlin. The firm said
37 partners and associates worked 49,952 hours since 2001. Partner William Lerach billed at an hourly rate of $850, and partner Patrick Coughlin billed at $700.
"The fee request is well outside the range of fees awarded in substantially similar cases," St. John's University law professor Michael Perino wrote on behalf of a group of U S West retirees.
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