Just before Halloween, a check has arrived from the dead: The Washington Mutual Securities Litigation has sent me a Halloween treat. I was a shareholder in that bank, and the class-action lawsuit on behalf of securities holders has been settled.
According to documents filed at U.S. District Court in Seattle, the insurers for former CEO Kerry K. Killinger, Chief Operating Officer Stephen J. Rotella, Chief Financial Officer Thomas W. Casey and several other miscreants of the extinct bank paid out $105 million. The underwriters, a Wall Street gang that includes Goldman Sachs, Morgan Stanley, Credit Suisse and others, disgorged $85 million. The accountants, Deloitte, chipped in $18.5 million. These payments are for various actions of financial daredeviltry that in September 2008 sent the largest bank in the state of Washington into the hands of the Federal Deposit Insurance Corp.
On WaMu shares that once traded in 2006 and early 2007 around $40, I now get just short of 16 cents. I’m not bellyaching; I’ve done enough of that already, and really 16 cents is more than I expected. A few years ago I had some shares in a company that got acquired, there was a class action lawsuit, and the only parties ever paid were the attorneys bringing the suit. I expected the same thing here. In fact, the New York attorneys asked for $46.9 million in fees plus $5.3 million of expenses, and it appears that they got it. Well, they wrote two complaints, fought off 10 motions to dismiss, interviewed 500 witnesses and discovered 26 million pages of documents.
Shares in WaMu were the bad investment of a lifetime. The bonfire of equity did, however, produce a couple of Seattle Times newspaper columns I still recall fondly, one from the wild shareholders meeting of 2008 and one an interview with former WaMu CFO Bill Longbrake, who wisely exited before WaMu’s most intense craziness.
I would write more, but I’ve got to get to my bank before it closes.