Today’s column is all about numbers.
Late last week a painful chapter closed for Barclays when Judge Lorna Schofield of the Southern District Court of New York signed off on the settlement proposed early last year to end a class action lawsuit relating to last look.
I have written about this case several times and while this trial is behind the industry, obviously many more are to come – as witnessed by the class action brought against several banks this month.
There are, as I have been arguing for seven years or more now, some serious issues facing the industry regarding the use of last look, but to me, reading through the court documents (yes I know I have to get out more), it was all about the numbers.
The settlement fund agreed last year and approved last week was for $50 million.
According to Judge Schofield’s court order approving the settlement, copies of the notice were mailed to 1,373 potential class action members.
An earlier document lodged with the court stated that there were 679 class members, so to be on the conservative side I will take this number.
The final settlement reveals that seven members of the class opted out of the settlement – these included two branches of Commonwealth Bank of Australia – so we have banks suing banks – as well as the Banque de France, thus we also have a central bank suing a bank.
As an aside, this may have made the French central bank’s input into Principle 17 of the Global Code interesting!
Anyhow, back to my numbers and the lead Plaintiff, Axiom Investment Advisors, looks to have been awarded an extra $10,000 out of the fund for taking the lead role, and the rest is distributed among the class action members on a pro-rata basis depending on the estimated impact upon their business.
My numbers here are theoretical (at least to start with – the one at the end is not), although in reality they are unlikely to be too far removed from the reality, so here we go.
Earlier documents filed with the court indicated that a class action member with decent volume and who was subject to a 23% reject rate would receive 0.75% of the settlement fund after
costs. Let’s assume that there are 29 at that rate. They would each receive around $300,000.
If we assume the balance of 650 class action members have an equal share of the balance, they would receive about $50,000 each – and remember this could be a lot less if there really are 1,373 class members.
So to summarise:
Axiom is likely receiving in the region of $310,000 from the settlement.
28 other members are perhaps receiving in the region of $300,000.
The 650 remaining members are probably receiving in the region of $50,000 (maybe less).
Now the mathematically minded amongst you will be charging for your app of choice to tell me this doesn’t add up to $50 million – and you’d be right, for I have one remaining number and it’s not theoretical.
Axiom as lead plantiff = $310,000
Others with high claims = $300,000
Regular class members = $50,000
The lawyers = $8,750,000 plus $339,292.64 in other costs.