SEC Commissioners Dissent ‘From an SEC Windfall’ for Class Action Attorneys

SEC Commissioners Daniel M. Gallagher and Michael S. Piwowar write a Wall Street Journal op-ed that is sharply critical of a proposed $600 million “fair fund” that would “distribute money collected from defendants to purportedly harmed investors in the insider trading case SEC v. CR Intrinsic Investors.”

“The only guaranteed winners will be administrators who distribute the fair fund and class-action lawyers who will take a significant cut of any funds paid to their clients,” write the authors.

CR Intrinsic Investors and a former portfolio manager were charged by the SEC in 2012 in connection with a $276 million insider trading “scheme” involving the development of an Alzheimer’s drug. As part of that settlement, the SEC recommended the “fair fund”.

“We refuse to be a part of any commission decision that will create a cottage industry for class-action lawyers, piggybacking on government investigations and targeting the disgorgement—and, even worse, government-ordered penalties—collected from defendants in SEC enforcement actions,” conclude the authors.

Read the full op-ed here.