Milberg Weiss Bershad & Schulman and a spinoff firm led by William Lerach dominated securities class actions over the last twenty years. But in 2006 and 2007, prosecutors indicted the Milberg firm, Lerach, Mel Weiss, David Bershad, and Steven Schulman for paying kickbacks to “class representative” plaintiffs, who were supposed to protect the interests of the class over those of the attorneys. The indictments solidified the argument that class representatives in securities class actions were not effective principals overseeing the work of their attorneys. On May 19, Lerach reported to prison in Lompoc, California; on June 2, Mel Weiss will be sentenced. But even as all of the attorneys have pleaded guilty, many argue that the crimes in the indictments were victimless. Did these kickbacks affect the amount of money that absent class members received from settlements? Did Milberg Weiss’s inappropriate relationship with their lead clients allow them to receive higher attorneys’ fees at the expense of investors? What does the Milberg Weiss indictment say about the benefits to investors of securities class actions? Will Democrats heed House minority leader John Boehner’s call for congressional hearings?

At this AEI event, law professor Michael Perino will present his new paper, “The Milberg Weiss Prosecution: No Harm, No Foul?”—published as part of the AEI Legal Center’s Briefly series—which seeks to objectively answer these questions. Using a database of approximately 730 class action settlements and fee awards, Perino examines the Milberg Weiss indictment in detail and analyzes whether these kickback payments harmed class members. AEI’s Peter J. Wallison and AEI Legal Center director Theodore H. Frank will comment on the paper and the Milberg Weiss indictment. Frank will moderate.