Distribution from class action settlement with Regions Bank
CORAL GABLES, Fla. (September 7, 2016) – The University of Miami School of Law’s Investor Rights Clinic received a $107,282 Cy Pres distribution in August stemming from the class action settlement in Laura Yelitza Cifuentes, et al. v. Regions Bank.
The genesis of the Cifuentes v. Regions Bank class action was a 2007 regulatory case that the Securities and Exchange Commission filed against U.S. Pension Trust Corp. and U.S. College Trust Corp. The SEC accused USPT of soliciting Latin American investors to invest in U.S. mutual funds through a trust structure, failing to provide adequate disclosures to investors, and failing to register as a securities dealer. The SEC ultimately prevailed in a bench trial against USPT.
Plaintiffs’ counsel then filed a class action lawsuit against Regions Bank on behalf of more than 5,000 Latin American investors who purchased the USPT investment plans. Regions had served as the trustee for the investment plans. The class alleged that the plans were sold in violation of Florida’s investor-protection statute and that Regions involvement rendered it liable under the statute. Regions denied all liability.
Ultimately, plaintiffs’ counsel secured a $13 million settlement of the class action lawsuit. After distributing the majority of the settlement to the class members, $107,282 remained of the settlement fund, which was insufficient to cover the cost of another round of distributions to investors such that it was not economically feasible to make further distributions. The plaintiffs’ counsel then sought and obtained an order from the Court permitting the Cy Pres award to the Investor Rights Clinic.
Courts have long recognized the concept of Cy Pres distributions. It allows for distributions of remaining funds in settlement class actions only when direct distributions to class members are not feasible --either because class members cannot be reasonably identified or because distribution would involve such small amounts that, because of the administrative costs involved, such distribution would not be economically viable.
The term Cy Pres comes from the Norman-French phrase Cy Pres comme possible, meaning, “as near as possible,” requiring the parties to identify a recipient whose interests reasonably approximate those pursued by the class.
“One of the reasons we recommended the Investor Rights Clinic for a Cy Pres award is because the clinic reasonably approximates the interests of the class in the underlying case,” said David Rothstein, J.D. '95 and partner at Dimond Kaplan & Rothstein, P.A. “The clinic includes financial outreach and helping small claim investors recover losses due to fraud and broker misconduct.”
Rothstein’s partner and co-counsel in the case, Jeffrey Kaplan, J.D. '94, said that “the clinic has earned a well-deserved reputation for excellence and for producing skilled advocates committed to protecting the rights of small investors. We are delighted that the Judge saw fit to approve a Cy Pres distribution that will help the clinic continue its good work.”
In addition to Rothstein and Kaplan, the class plaintiffs were represented by Lorenz Prüss, of the law firm of Dimond Kaplan & Rothstein, P.A., and co-counsel James Sallah, J.D. '96, of Sallah Astarita & Cox, and Scott Silver, J.D.' 96, of Silver Law Group.
“We are honored to receive the Cy Pres award in this significant case,” said Teresa J. Verges, the clinic’s Director. “This award will assist the law school in providing continued funding to the clinic, which was launched in 2012 after receiving a limited grant from the FINRA Foundation.”
Verges joined the law school in Fall 2011, after nearly a 13-year career with the SEC in its Miami office. She was the Assistant Director overseeing the SEC’s investigation against USPT and Regions Bank, which led to separate enforcement actions.
Since its launch in January 2012, the Clinic has recovered over $750,000 for its clients. Clinic student interns have also conducted financial outreach events throughout South Florida, drafted comment letters on FINRA rule proposals, and drafted articles regarding the latest financial news impacting investors and securities arbitration, posted on the Clinic’s blog.
From left to right: Scott Eichhorn, University of Miami Investor Rights Clinic; David Rothstein, Dimond Kaplan & Rothstein, P.A.; Teresa Verges, University of Miami Investor Rights Clinic; Scott Silver, Silver Law Group; Jim Sallah, Sallah Astarita & Cox, LLC; Jeff Kaplan, Dimond Kaplan & Rothstein, P.A.
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The University of Miami School of Law’s mission is to foster the intellectual discipline, creativity, and critical skills that will prepare its graduates for the highest standards of professional competence in the practice of law in a global environment subject to continual ― and not always predictable ― transformation; to cultivate a broad range of legal and interdisciplinary scholarship that, working at the cutting edge of its field, enhances the development of law and legal doctrine, and deepens society’s understanding of law and its role in society; and to fulfill the legal profession’s historic duty to promote the interests of justice. www.law.miami.edu
CONTACT: Catharine Skipp at 305-773-5801 or cskipp@law.miami.edu
