George Hopkins, director of the Arkansas Teacher Retirement System, has told a federal court in Massachusetts that the system wants to remain as class representative in a lawsuit against a securities firm where lawyer fees have become controversial.

Hopkins’ decision follows what was described in the Arkansas Democrat-Gazette as a vote Monday by the Board of Trustees of the System to recommend that he withdraw as a representative in the suit against State Street, which produced a $300 million settlement. The Board chair said, however, he didn’t want to “push” Hopkins to make a decision. A court controversy continues about $75 million in attorney fees paid out of the settlement. Some, it was learned recently, was paid as a finder’s fee to an unnamed law firm. Hopkins defended the lawyers’ work at the ATRS board meeting, where trustees also asked him to report on a dozen class action lawsuits in which the system is still participating.

Advertisement

Hopkins had told the Arkansas Blog, which first reported on the issue in Arkansas, that one of the lead firms in the case, Labaton Sucharow, had been introduced to then-ATRS Director Paul Doane by then-Sen. Steve Faris. He said he didn’t know about a referral fee paid in the case until the recent special master’s report. But he said the firm had done good work.

In a statement filed Wednesday in federal court in Massachusetts, Hopkins said he wanted ATRS to stay as class representative, though a federal judge had suggested he contemplate whether he should step down. The filing said the ATRS board had authorized him to use his “best judgment” about ATRS remaining as class representative. He said he’d sought independent legal advice and he noted ATRS had pushed the case from the start and won a large settlement. He said ATRS had always been open about its role and had led some 30 class action suits that had recovered more than $2 billion for retirement funds. He acknowledged “imperfection” in the case, but said “hindsight is 20/20.”

Advertisement

Armed with legal advice from counsel “whose conduct is not at issue” and with the extensive knowledge of the posture of this case, I feel ATRS is uniquely positioned to represent the customer class and to knowingly and actively assist in moving this matter to a proper conclusion and confirm that ATRS wishes to continue as a class representative for the Customer Class.”

Labaton Sucharow also issued a statement:

As Class Representative in the State Street class action, Arkansas Teacher Retirement System played a critical role in helping formulate and evaluate litigation strategy, overseeing and supporting class counsel and establishing a basis for a strong financial recovery for the class. George Hopkins personally did an outstanding job as class representative throughout the six-year entirety of the case. At the direction of ATRS the legal team achieved an excellent result on behalf of the class. We support ATRS’ continued role as Class Representative in this successfully settled case.

A special master’s report has led the federal judge to consider whether the law firms should repay some of their fee because of the sharing arrangement questioned by the master. That report remains under seal, but some elements of it became known through a court hearing last week.

Advertisement

I asked Hopkins this morning about a seeming contradiction in the report on the Board vote Monday and his decision to remain. He responded:’

The ATRS Board recommendation was for me to use my best judgment as to stay or go. The recommendation was if I saw this taking too much time or otherwise would lessen my focus on ATRS that the ATRS Board would support a withdrawal.