Milberg Weiss Bershad & Schulman, the law firm that has won more than $45 billion for investors in securities-fraud cases, and two of its partners were charged with participating in a scheme to pay illegal kickbacks to clients.
The New York-based firm, Steven Schulman, 54, and David Bershad, 66,(pictured) were indicted on multiple felony counts including mail fraud and conspiracy, the U.S. attorney’s office in Los Angeles said today. Bershad and Schulman took leaves of absence from the firm this week.
The indictments might inhibit the firm’s ability to represent clients in securities cases. The charges might threaten its largest case in which the firm is managing a group of 309 class actions for shareholders who claim initial public offerings were manipulated by investment banks to inflate market prices. JPMorgan Chase & Co. agreed in April to pay $425 million to settle IPO claims against it, the first bank to do so.
“You can’t go into court as an indicted entity and say you ought to be able to represent the class,” said Adam Pritchard, a securities-law professor at the University of Michigan Law School. “It’s unfathomable to me that any judge would approve an indicted firm as counsel for the lead plaintiff.”