US law firm rapped over shareholder class action expenses claims

Judge expresses dismay over “misleading” expenses

Robbins Geller Rudman & Dowd, the US law firm which specialises in class action cases on behalf of some of the world’s leading institutional investors, has been rapped by a judge for “misleading” expenses claims.

The firm, which this month launched cases for investors against J.P. Morgan, Wal-Mart and Facebook, is facing sanction over a case in which it is acting for Boston-based union pension fund, the Plumbers Local 12, against Nasdaq-listed student travel firm Ambassadors Group.

Judge Justin Quackenbush of the US District Court in Washington formally notified the firm and two of its partners, Joy Bull and John Grant, that he intends to sanction them by “at a minimum, a formal admonition, or at a maximum, a formal written Reproval”.

He noted his “dismay” at what he termed “misleading expense and disbursement claims”. The judge also said the firm had not responded to his concerns that “a pattern of conduct in such matters may exist”.

Robbins Geller’s client list comprises leading institutional investors. It has worked for major US pension funds including the California Public Employees’ Retirement System and California State Teachers’ Retirement System, the Illinois State Board of Investment, the Los Angeles County Employees Retirement Association (LACERA), the Ohio Public Employees Retirement System and the Washington State Investment Board to name a few.International clients include Commerzbank, Canada’s Labourers’ Pension Fund, the Lothian Pension Fund, the Merseyside Pension Fund, Mn Services B.V., Scottish Widows Investment Partnership Limited, the London Pensions Fund Authority, and the West Midlands Metropolitan Authorities Pension Fund. In December last year it obtained a $200m cash settlement for institutional investors from Motorola.

In a court memorandum Quackenbush said the expenses matter has “inappropriately delayed” payouts to investor plaintiffs.

The judge was initially prompted to investigate the firm’s expenses by its claim of $125,935 for “investigators” – which he found were not “not true statements” of the monies paid to the listed individuals.

It resulted in a revised expenses claim of $114,137 rather than the $223,095 originally declared.

The judge also probed a claimed $17,802 for meals and transport – and found evidence of $400 meals, $70 bottles of wine and first class air travel.

Quackenbush said it was “not appropriate for the persons who suffered the securities losses to pay for first class transportation”. Robbins Geller founding partner Darren Robbins did not respond to a request to comment. Court memorandum