U.S. District Court Judge Dennis Cavanaugh has scheduled a hearing to review the investor settlement where KPMG and the law firm Sidley Austin Brown & Wood agreed to pay $225 million. The the accounting firm and the law firm initially agreed to pay $195 million plus $30 million for legal fees to settle an investor class action suit back on September 27. The law firm will pay 20 percent of the $195 million settlement or $39 million.
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The judge scheduled an October 28 hearing to resolve the questions of some of the individuals involved in the suit concerning the months-long negotiation process followed to reach the agreement. There were allegations of conflict of interest and breach of ethics on the part of Milberg Weiss who alledgedly colluded with KPMG to reach the settlement while representing investors in the class action suit according to the New York Times.
“Frankly, I am just not comfortable approving preliminarily the settlement at this time,” said Judge Cavanaugh after the September hearing. The judge added, “I just want to hear a little more.”
“He said he’s not judging whether he’s going to give preliminary approval or not at this point. He just wants to get some evidentiary testimony,” said Melvyn Weiss, partner in Milberg Weiss Bershad & Schulman in CNN Money. Weiss said in the New York Times, “We had always told our individual clients that they had to give individual consent or we would not file the class action” through which the settlement would be administered. Weiss said in Reuters, “The attack was on the process. So now we get an opportunity to put our witnesses on to show this was a perfectly proper negotiation.”
The settlement may be divided between up to 280 investors according to the New York Times. KPMG spokesman Tim Connolly speaking with Reuters said, “KPMG looks forward to resolving the civil litigation and with full and fair accountability,”