A report released Tuesday by a Massachusetts federal court emphasizes the role former Arkansas Sen. Steve Faris played in helping a law firm land the Arkansas Teacher Retirement System as a client in a class action securities case that produced a $75 million attorney fee.
Law360 reports on findings by retired federal Judge Gerald Rosen, appointed to review the fee arrangement after questions were raised.
In a memo filed under seal in August, the special master tasked with delving into the $75 million award laid out excerpts from emails involving Labaton Sucharow and the Texas attorney he said informed his conclusion that “serious ethical violations” arose from an arrangement in which Labaton Sucharow paid Damon Chargois to use his business and political connections, including with former Arkansas Sen. Steve Faris, to land clients for the firm.
In the State Street case, overseen by U.S. District Judge Mark L. Wolf, that deal resulted in a $4.1 million payment from Labaton Sucharow to Chargois, despite the fact that Chargois contributed no legal work to the now-settled fraud case.
Labaton Sucharow has argued strenuously that the Chargois payment was a permissible referral fee. But in the now-unsealed memo, retired federal Judge Gerald Rosen said Chargois acted “in a business development capacity” for Labaton Sucharow to land fund clients like the Arkansas Teacher Retirement System in exchange for a cut of the firm’s future fees.
The connections have been reported before and all parties, including ATRS and its director George Hopkins, have insisted Labaton got its contract through an open bidding process and all had clean hands.
The cover memo released Tuesday and some supporting documents hadn’t been public previously.
The exhibits, including emails about Chargois’ contacts with Faris and others, “are critical to the court’s understanding of the record upon which the special master’s findings of facts are based,” Rosen said in the memo.
Auditor Andrea Lea and legislators have been pressing for more information about this relationship. The lawsuit recovered
millions $300,000 for ATRS, which has participated as a lead plaintiff in other class actions. All involved have insisted no financial considerations were paid. Faris currently serves by appointment of Gov. Asa Hutchinson on the state Public Employees Retirement System board.
We’ve detailed here the intricate web of Arkansas connections by which Chargois and then Labaton wound up representing Arkansas.