Declaration Of Helen J. Hodges In Support Of Lead Counsel's ...

team; for example, we reviewed information regarding the securities that the banks insisted on
including in the settlement class, financial information about the banks to assess the ability to pay
and the “hot” documents on liability. We also drafted the term sheets for JPMorgan and CIBC and
worked on negotiating and drafting of the stipulations of settlements for all the settlements. Drafting
the stipulations of settlement to document the agreements required many days of our time; here
again, the banks were represented by excellent lawyers and they were very careful about forking
over $6.6 billion. They wanted extremely broad releases and “claw-back” provisions that we had not
agreed to in prior settlements. The “clawback” meant that if more than a certain percentage of the
Class members opted out, the settlement amount would be reduced. At Chris Patti’s suggestion, we
insisted on a “claw-in” which provided that to the extent private action plaintiffs dropped their cases
and joined in the Class settlement, the banks would pay some additional amount to the Class.
255. As the documentation of the three large bank settlements proceeded, we were
approached by Miles Ruthberg, who represented Andersen LLP, regarding settlement. The Regents’
concern, as expressed by Chris Patti, was that if we settled with Andersen, any judgment against the
remaining banks would be reduced by Andersen’s proportion of culpability as set by the jury and
that amount could be substantial. Because Andersen was no longer operating and it had limited
insurance for the Class’ claim, it was impossible for the amount it could pay to offset the risk of a
large judgment reduction. Miles Ruthberg and his client representatives were cognizant of our
concern about settling with Andersen. After several face-to-face meetings with Andersen in the fall
of 2005, Chris Patti came up with the idea of a “sunset” provision such that if we went to trial
against the banks, the settlement with Andersen would be terminated. With that provision, we could
settle with Andersen. We then negotiated to maximize the recovery for the Class based on
Andersen’s ability to pay. Ultimately, Andersen agreed to pay $72.5 million to the settlement class
and it also agreed that if we went to trial against the banks, the settlement would be terminated.
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