Lieff Cabraser Heimann & Bernstein, LLP

Bid-Rigging Pact Hits Snag

J.P. Morgan Chase & Co., UBS AG and Bank of America Corp. have agreed in the past eight months to pay more than $500 million to settle government allegations they underpaid hundreds of hospitals, schools, cities and other entities. The settlements, more of which are expected, have been a coup for the government as the public demands more accountability of Wall Street practices.

Some municipalities aren't celebrating. The money has been paid into escrow by the banks, but states have been unable to disburse it or contact victims. A federal court has to approve the notice informing victims of the settlement, but that has been held up as private attorneys argue that the language doesn't make clear that victims can opt out and sue privately, according to legal documents. Private lawyers, who would profit from such suits, have said plaintiffs could net more this way.

"Excuse me, but California is the seventh-largest economy in the world and they are getting maybe $18 million," said Eric Fastiff, a partner at Lieff Cabraser Heimann & Bernstein LLP in San Francisco, who is representing Alameda County, the cities of Oakland and Fresno, and the Fresno County Financing Authority.

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