New York State Comptroller Alan G. Hevesi, trustee of the $140 billion New York State Common Retirement Fund (CRF), said that he will petition the court to replace the law firm of Milberg Weiss as lead counsel in the Bayer AG class action litigation in which the comptroller is lead plaintiff.
In addition, the comptroller has removed the firm from the pool of firms eligible to serve as the CRF’s counsel in future securities litigation matters.
Hevesi took these actions following the firm’s indictment in Los Angeles on charges involving its representation of clients in certain other securities class action litigation in which the CRF had no involvement.
The firm has been accused of secretly paying millions of dollars in kickbacks to clients who agreed to act as lead plaintiffs in various lawsuits the firm filed over the past 20 years.
The firm has denied the charges. “The government’s allegations of wrongdoing have been categorically denied by the indicted partners, and the firm intends to join with them in vigorously defending against the charges,” it said in a statement.
Hevesi said the firm had achieved outstanding results for the CRF, and he emphasized that the firm is innocent until proven otherwise. Nevertheless, given the nature of the charges against the firm, Hevesi said he was compelled to take this action based upon the standards generally adhered to by his office in connection with contract matters.
Currently, the firm serves as lead counsel in a class action suit against the pharmaceutical firm Bayer AG. The suit alleges Bayer misled investors by making false statements about the safety of Baycol, a cholesterol-lowering drug suspected of playing a role in at least 100 patient deaths. As a result of Bayer AG’s securities law violations, the CRF lost more than $22 million.