The issue of “pay-to-play” in the securities litigation area was touched on by U.S. District Judge Mariana Pfaelzer (C.D. Cal.) yesterday in the Countrywide Financial Corp. securities class action. The WSJ reports that in her ruling yesterday, Judge Pfaelzer discussed a $50,000 campaign contribution from one of the lead counsel in the case, Labaton Sucharow, to New York state Comptroller Thomas DiNapoli. DiNapoli is the sole trustee of New York State Common Retirement Fund, one of the lead plaintiffs in the Countrywide lawsuit.
Although the court ackowledged that pay-to-play issues could potentially defeat a class certification motion, she found that it was “speculative” to say that Labaton’s contributions created any attorney-class conflict. She further found that career staff of the New York State Common Retirement Fund had followed reasonable ethics protocols in recommending Labaton as lead counsel.
“Attorneys are free to donate to politicians who support their views,” she wrote. “Similar political-donation freedom exists for lawyers and parties on the defense side.” She also added in a footnote that “Courts have long been less enamored of securities litigation pay-to-play arguments than litigants and the press.”
