The Gloves Come Off: PIMCO to Settle in Bond Market Manipulation Suit
Pacific Investment Management Company (PIMCO) recently agreed to pay $92 million to settle a class action alleging manipulation of the futures market. As is typical when a party settles contested litigation, PIMCO denied any misconduct. This is typical – and often appropriate – because a settlement is a compromise and not a determination of liability, and any defendant would understandably want to make that clear.
A PIMCO manager, however, apparently wasn’t satisfied with denying liability, but felt the need to take a gratuitous swipe at the plaintiffs’ bar. The manager, Bill Gross, said: “When you’re this size, and this big, you’re a target of class-action legal maneuvering.”
Well, Mr. Gross, let’s get a couple of things straight. First, if a defendant has done nothing wrong, no amount of “class action legal maneuvering” could possibly have much effect. Lawyers generally cannot prove cases without evidence.
Second, no matter what size they are, companies do not write $94 million checks easily. You and PIMCO can deny liability all you want, but as long as you think it’s ok to blame class actions for your problems, I feel free to draw the conclusion that you are paying the money to avoid a real risk of a much larger verdict at trial. Your lawyers probably insisted on a protective order to avoid public disclosure of the evidence, but if I were a betting man, I’d bet there was a lot of it.