Banks Settle Shareholder Classs Action for $6.75M

MANHATTAN (CN) - Goldman Sachs and Morgan Stanley have settled a class action lawsuit for $6.75 million, recently filed federal court documents show.

Although a preliminary settlement was reached last September, U.S. District Judge Shira Scheindlin disclosed the amount of the award on Wednesday, in a decision granting the Law Offices of Curtis V. Trinko one-third of the settlement money.

The lead plaintiffs of the suit, Lawrence Fogarazzo, Carolyn Fogarazzo, Donald Engel and Stephen Hopkins, accused the banks of preparing misleading analysts' reports about stock for RSL Communications.

Represented by Trinko, they first filed the class action suit against Lehman Brothers, Goldman Sachs & Co. and Morgan Stanley & Co. on July 15, 2003.

In 2005, Judge Scheindlin approved certification for a class of plaintiffs who bought or otherwise acquired common stock in RSL between April 30, 1999, and Dec. 29, 2000.

After the plaintiffs fought motions of dismissal, underwent extensive discovery and took several depositions, a preliminary settlement was reached on Sept. 27, 2010. A settlement hearing was held on Jan. 31, 2011.

In addition to taking home one-third of the settlement, expenses awarded by Scheindlin will give Trinko more than $2.4 million in total.

"Class counsel diligently litigated plaintiffs' claims against defendants Morgan Stanley and Goldman Sachs throughout the seven and one-half years of active litigation," Scheindlin wrote.

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