In a case that again shows the difficulties the Securities and Exchange Commission faces in distributing legal settlements to aggrieved shareholders, the Commission recently asked a judge to let a $250 million settlement with Qwest Communications be disbursed by a private distribution agent, rather than the Fair Fund system created by the Sarbanes-Oxley Act.
The Qwest proposal, made on Feb. 24 to a federal judge in Colorado, would consolidate money currently held in the Fair Fund with a class action settlement involving the troubled telecommunications company. “The SEC’s plan seeks to minimize costs, maximize the recovery of investors, and complete the distribution as efficiently as possible,” the Commission said, noting that no part of the money currently held by the government would go to pay the fees or expenses of the private lawyers who filed the class action suit.
