Many CA shareholders in November were compensated to the tune of $289 million for all of the wanton fraud that took place within the company several years ago. Unfortunately, they just were asked to give some of that money back.
According to a post in the Wall Street Journal’s Law Blog, because of an administrative error, 3,000 investors were overpaid by an average of $16,700 apiece. Last week, a federal court gave those overpaid shareholders until Jan. 4 to send the extra money back.
Drats, here’s hoping nobody blew the extra cash on Christmas gifts for the kids.
From the post:
I’m very unhappy about this,” says Kenneth Feinberg, the lawyer overseeing the plan to distribute the money. “This situation is unique in my experience.” (Law Blog Biographical Tidbit: As a young federal prosecutor in the 1970s, Feinberg worked in the Manhattan office’s all-star public-corruption unit alongside Giuliani, Mukasey and Bart Schwartz.)
The overpayment error was caused by Gilardi, a settlement administration firm. The distribution plan called for investors to be paid based on their proportional losses. But after Gilardi cut settlement checks in November, it realized it had failed to pay 2,000 investors, according to a court filing. As a result about 88,000 investors were overpaid by a total of $60 million — with most of that going to the 3,000 investors with the biggest losses, many of them institutional investors. Said an executive there: “We owned the error and now we need to own the solution.”
What if overpaid investors fail to return the money? A Gilardi executive declined to say or to address who might be expected to cover any shortfall. “We are expecting to have the amounts returned.”
