Class-action lawyers might be the business equivalent of ambulance chasers. Maybe someone will start a website and start running billboards and wrapping buses in advertisements: “Stock price got you down? Call 411Class and get a free referral to an attorney.”
During my three-decade tenure in business journalism in South Florida, I’ve seen tons of class-action suits get filed. As an investor, I’ve also received plenty of mail inviting me to fill out long, complicated forms so I, too, can be part of a settlement. Sorry, I don’t have hours to spend filling out the forms.
After hearing banker Alan Levan and attorney Eugene Stearns talk about their experiences with a class-action lawsuit, I’ve become even more skeptical.
I’ve followed Levan’s career almost since arriving in South Florida in 1984. He has survived a lot of economic ups and downs and has been a long-time community benefactor. I was a condominium association president in the early 1990s when a lot of the savings and loans failed in South Florida and the value of our condo units were cut in half. Levan managed to sail on.
Class-action lawyers went after Levan when BankAtlantic’s stock price dipped as the housing market tanked in 2007. In retrospect, Levan did a pretty good job of disclosure and also should get a gold star for avoiding a government handout or bailout. The class-action lawyers ultimately failed.
There is reason to wonder if the Securities and Exchange Commission would have gone after Levan and BankAtlantic if he had written a check to settle the class-action issue. In the SEC case, he easily could have accepted being barred from directing a public company for a couple of years since he and his partner, Jack Abdo, had a controlling stake in BankAtlantic Bancorp. Indeed, Levan’s son, Jarett, did an admirable job of running the company when Levan temporarily was barred from being CEO during the SEC litigation. (Maybe the SEC did get a few ounces of flesh.)
In our cover story, Stearns outlines what appears to be a cozy relationship between the SEC and class-action lawyers. That’s troubling.
In any event, the SEC definitely met its match. Nine years and $20 million in lawyer bills later, Levan was cleared fully in May.
As for the class-action lawyers, they should note the Fairness in Class Action Litigation Act of 2017. It appears some members of Congress are worried that the biggest beneficiaries of class actions are lawyers, not the members of the class. What a surprise.
The Gunster law firm has 400 lawyers and staff members. An article in the June edition incorrectly said that was the number of attorneys.