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From Securities Regulation Daily, December 23, 2013

Plaintiffs' counsel in Citigroup bond action awarded $116.8 million in fees

By Rodney F. Tonkovic, J.D.

The District Court for the Southern District of New York has awarded attorney fees in the settled fraud action against Citibank, Inc. The court had earlier approved a $730 million settlement, the second-largest recovery in an action brought by purchasers of debt securities. The plaintiffs' attorneys, Bernstein Litowitz Berger & Grossman LLP (Bernstein Litowitz), were awarded fees of $116.8 million, which is 16 percent of the settlement fund (In re Citigroup Inc Bond Litigation, December 19, 2013, Stein, S.).

Background. The action was brought on behalf of purchasers of bonds issued by Citigroup, Inc., and raised claims under the Securities Act. According to the complaint, Citigroup made materially misleading statements or omissions in the offering documents for 48 different bond issuances between May 2006 and November 2008. Settlement negotiations commenced in late 2012, and a preliminary settlement was approved in March 2013. The plaintiffs agreed to settle all claims in exchange for a payment of $730 million, and the court approved the settlement in August 2013 (reported in the Securities Regulation Daily Wrap-Up for August 20, 2013).

Attorney fees. Bernstein Litowitz sought attorney fees and reimbursement of litigation expenses, as well as reimbursement of costs and expenses incurred by the class representatives. The firm asked for 20 percent of the settlement fund ($146 million). The court found that the requested percentage was too high and concluded that 16 percent of the settlement amount ($116.8 million) was reasonable.

Bernstein Litowitz argued that 20 percent was reasonable given fee awards in other actions with significant recoveries. The firm also pointed out that all of the lead plaintiffs approved the fee application. The court, however, stated that it had a responsibility to avoid awarding a "windfall," and added that there are many cases with comparably large settlements in which the attorneys were awarded less than 20 percent. The court found that the median amount awarded in cases of similar size was 16 percent and concluded that a fee award of that amount would be reasonable.

The court then subjected the award to a lodestar crosscheck and an examination of the Goldberger v. Integrated Resources, Inc., factors and confirmed its reasonableness. Bernstein Litowitz was then awarded $7,286,868 in reimbursable expenses. The lead plaintiffs received $39,946 for costs and expenses.

The case is No. 08 Civ. 9522.

Attorneys: Andrew L. Zivitz (Kessler Topaz Meltzer & Check, LLP) for Louisiana Sheriffs' Pension and Relief Fund, Minneapolis Firefighters' Relief Association, City of Philadelphia Board of Pensions and Retirement, Miami Beach Employees' Retirement Plan and American European Ins. Co. Brad Scott Karp (Paul, Weiss, Rifkind, Wharton & Garrison LLP) for Citigroup, Inc.

Companies: Louisiana Sheriffs' Pension and Relief Fund; Minneapolis Firefighters' Relief Association; City of Philadelphia Board of Pensions and Retirement; Miami Beach Employees' Retirement Plan; American European Ins. Co.; Citigroup, Inc.; Bernstein Litowitz Berger & Grossman LLP

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