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.

Your witness.

Colin_lambert@profit-loss.com

Twitter @lamboPnL

Twitter @Profit_and_Loss

Colin Lambert

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